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Source: http://www.doksinet   EBC1:  Key  words         Unit  1  –  Business  Organisations  I:  Aims  &  Activities  .2     Unit  2  –  Business  Organisations  II:  Legal  Framework  .  6     Unit  3  –  Corporate  Management  &  Culture  .11     Unit  4  –  Human  Resources  I:  Personal  Management  .  15     Unit  5  –  Human  Resources  II:  Industrial  Relations  .  20     Unit  6  –  Business  Transactions  I:  Inquiries  &  Offers  .  24     Unit  7  –  Business  Transactions  II:  Orders  &  Contracts  .  34     Unit  8  –  Marketing  I:  Introduction  &  Product  Policy  .  41     Unit  9  –  Marketing  II:  Price  &

 Promotion  .  45     Unit  10  –  Marketing  III:  Distribution  .  53   Summary  of  Key  words  for  EBC1  by  Arsen  Hovakimyan  (April  2015)     Obenaus,  Wolfgang,  and  Josef  Weidacher.  New  Handbook  of  Business  English:   Keywords  in  Context.  Wien:  Linde,  2006  Print     Source: http://www.doksinet Unit  1  –  Business  Organisations  I:  Aims  &  Activities     (1)  Business  organisation1  –  general   Unternehmen  –  allgemein     Business   organisations,   also   referred   to   as   firms,   businesses,   business   firms,  companies,  concerns  and  enterprises,  are  economic  units  providing  a  legal,   financial  and  organisational  framework  for  the  production  and/or

 distribution  of   goods   and   services.   From   the   point   of   view   of   economic   history,   they   are   the   result  of  the  continuing  process  of  specialisation,  which  has  become  the  hallmark   of   modern   civilization.   Today   it   is   often   overlooked   that,   originally,   production   and   consumption   took   place   within   a   single   economic   unit   (e.g   a   farm   household).     Business   organisations   should   not   be   confused   with   business   establishments,   which   are   concrete   physical   facilities   required   to   carry   out   production   and   distribution.   Examples   of   establishments   are   plants,   factories   mills,  offices  and  shops.    

Business  units  may  be  organized  in  a  variety  of  legal  forms,  each  of  which   has  different  financial  and  organisational  implications.    A  firm  may  operate  as  a   sole  trader,  as  a  partnership,  or  as  a  company  (in  the  legal  sense),  i.e  a  business   organisation  with  a  legal  existence  independent  of  that  of  its  members.     The   above-­‐mentioned   forms   of   business   organisation   are   sometimes   classified  as  traditional  (or  mainstream)  to  contrast  them  with  alternative  forms,   such  as  the  various  types  of  co-­‐operative  societies  and  the  commune.       (2)  Business  organisation2  –  objectives   Unternehmensziele    

From  the  point  of  view  of  organisational  theory,  business  organisations  are   social,  or  rather  socio-­‐technical,  systems  deliberately  created  for  the  purpose  of   achieving  particular  objectives.  The  two  basic  objectives  of  such  an  organisation   are:   firstly,   to   produce   output   (i.e   goods   and/or   services)   by   combining   and   transforming   resources   (physical,   financial,   human   and   information   resources)   purchased,  hired,  or  otherwise  acquired  from  its  environment;  and  secondly,  to   sell  its  output  to  non-­‐members  at  prices  that  more  than  cover  costs  (at  least  in   the  long  run),  thereby  generating  income  for  the  providers

 of  risk  capital,  i.e  its   members  (profit  objective).     All  this  distinguishes  business  organisations  from  social  groups  that  are  not   set  up  to  achieve  a  particular  purpose,  e.g  families  and  groups  of  friends,  which   exist   for   their   own   sake,   basically   to   satisfy   emotional   needs   of   their   members.   They  also  differ  from  voluntary-­‐sector,  non-­‐profit  organisations,  which  do  have  a   specific  purpose  and  do  produce  output,  but  make  that  output  available  to  non-­‐ members  free  of  charge  or  at  cost.     2   Source: http://www.doksinet The  basic  objectives  outlined  above  can  be  refined  upon  and  supplemented  

with   subsidiary,   or   instrumental,   aims.   Production   is   only   meaningful   if   it   is   capable   of   satisfying   consumer   needs.   Thus,   the   satisfaction   of   human   needs   might  be  regarded  as  an  important  –  some  would  say  the  most  important  –  goal   of   a   business   enterprise,   a   goal   it   shares   with   non-­‐profit   organisations   (NPOs).   The  profit  goal  may  be  expressed  in  absolute  terms,  as  a  growth  rate,  or  as  a  rate   of   return   on   capital   invested.   Subsidiary   objectives,   which   sometimes   may   become   primary   goals,   are   survival,   maintaining   the   capital   base   of   the   company   concerned,  sales

 volume,  efficiency  (closely  linked  with  the  profit  objective)  but   also  employee  welfare  and  prestige,  which  are  less  easy  to  pin  down.     The   goals   of   a   specific   business   organisation   are   the   result   of   a   balancing   act   between   demands   from   the   various   groups   involved   (stakeholders)   –   primarily  its  owners,  but  of  course  also  its  suppliers,  customers  and  employees,   as  well  as  trade  unions  and  public  authorities.       (3)  Business  communication   Wirtschaftskommunikation     Business  communication  is  the  exchange  of  messages  in  a  business  context.   Like   any   other   form   of   communication,   it   involves  

senders   and   receivers   of   messages,  media  to  convey  them,  and  the  messages  themselves.     A  typical  business  unit  may  send  messages  to,  and  receive  messages  from,   customers,   suppliers,   banks,   insurance   companies,   advertising   agencies,   shareholders,   trade   unions,   environmental   organisations   and,   alas,   the   revenue   authorities   (external   communication).   But   corporate   communication   also   has   a   role   to   play   inside   the   unit   (internal   communication).   Messages   have   to   be   exchanged  between  its  various  offices,  sectors  or  departments,  such  as  Accounts,   Goods  Inwards,  Goods  Outwards,  General  Office,  Mail  Room,  and  Warehouse.  

  Enterprises  have  a  great  variety  of  media  available  for  internal  and  external   communication.   Messages   may   be   transmitted   by   letter,   postcard   or   telephone   Alternatively,  one  of  the  more  modern  media  such  as  e-­‐mail  or  fax  can  be  used.   Last  but  not  least,  face-­‐to-­‐face  communication,  as  exemplified  in  meetings,  sales   talks,  contract  negotiations  and  the  like,  has  to  be  mentioned  in  this  context.     The  number  of  different  types  of  messages  is  legion.  A  useful  distinction  is   that   between   external   messages   (such   as   inquiries,   offers,   orders   and   complaints)   and   internal   ones,   these   latter

  frequently   referred   to   as   (internal)   memos.     The  terminology  describing  business  communication  formats  has  recently   been   enriched   by   a   few   new   buzzwords   based   on   e-­‐commerce   jargon:   B2E   (or   business-­‐to-­‐employees)   refers   to   electronic   exchanges   between   superiors   and   subordinates   at   all   levels,   B2G   denotes   business-­‐to-­‐government   interactions,   while   F2F  is   used   for   face-­‐to-­‐face   communication   in   both   internal   and   external   contexts.     3   Source: http://www.doksinet (4)  Stakeholder   Anspruchsberechtigter,  Interessengruppe,  Koalitionär,  Stakeholder     This  term  has  been  modelled  on  stockholder,  and  the  idea

 underlying  it  is,   in  effect,  an  extension  of  the  stockholder  concept.  Originally,  a  company’s  main   responsibility   was   to   its   stockholders,   whose   benefits   its   management   were   supposed   to   maximize.   In   the   course   of   time,   however,   more   and   more   people   have   come   to   think   that   a   company   has   a   wider   responsibility,   and   should   not   ignore  the  interests  of  other  social  groups  that  are  affected  by  its  activities.  These   groups,   which   include   the   firm’s   employees,   its   suppliers   and   customers,   the   community   where   it   is   located,   and   the   general   public   (acting,   for   instance,  

through   the   government   or   environmental   organisations),   are   called   stakeholders,   because   they   too   have   a   stake   in   the   business,   although   not   a   financial  one.     The  stakeholder  concept  represents  a  new  and  interesting  way  of  looking   at  companies  and  their  role  in  society.  Quite  a  few  have  already  incorporated  it   into  their  management  philosophies,  either  because  they  really  believe  in  social   responsibility   or   because   they   have   realised   that   a   more   responsible   attitude   towards   society   is   likely   to   enhance   their   reputation.   This   may   create   a   competitive  advantage  and  help  them  achieve  their

 true  goals.       (5)  Staff1   Belegschaft,  Belegschaftsmitglieder,  Personal  (in  Dienstleistungsbetrieben)     The  term  staff  (or   personnel)  refers  to  a  group  of  people  carrying  out  work   under   common   management.   There   is   a   tendency   to   use   this   term   for   the   employees   of   service   businesses,   e.g   insurance   and   newspaper   companies   By   contrast,   those   of   steelworks   and   similar   establishments   are,   as   a   rule,   collectively   referred   to   as   the   workforce.   It   should   be   noted   that   the   word   frequently  takes  the  verb  in  the  plural,  as  in  five  staff  were  dismissed.       (6)  Supplier   Lieferant,

 Lieferer,  Anbieter     A   supplier   is   typically   a   firm   selling   goods   and/or   services   to   other   firms,   private  individuals,  government  agencies,  etc.       (7)  Sales1   (Gesamt-­‐)Umsatz  (einer  Firma)     In  accounting,  the  term  sales  refers  to  the  total  revenue  derived  by  a  firm   from   the   sale   of   goods   and/or   services   in   the   normal   course   of   business.   Gross   sales   include   returns,   discounts,   and   value   added   tax,   if   any,   while   net   sales   exclude  these  items.  Sales  are  always  related  to  a  specific  period  of  time,  ie  they   represent  a  flow  of  concept.     4   Source: http://www.doksinet

(8)  Sales2   (Gesamt-­‐)Absatz  (einer  Firma)     The   term   sales   may   also   refer   to   the   total   quantity   of   products   sold   by   a   business   organisation   within   a   certain   period   of   time.   In   contexts   where   it   is   necessary   to   clearly   distinguish   between   the   two   concepts   as   defined   in   sales1   and   sales2,   the   expressions   value   sales   (total   revenue)   and   volume   sales   (total   quantity  sold)  may  be  used.       (9)  Turnover2   Umsatz     In  British  usage,  turnover  also  refers  to  the  total  revenue  derived  by  a  firm   from  the  sale  of  goods  and/or  services  in  the  ordinary  course  of

 business,  i.e  it  is   synonymous  with  sales1.       (10)  Return2   Ertrag,  Rendite     Return  is  one  of  the  key  concepts  in  economic  analysis.  It  is  a  ratio  used  to   measure   the   profitability   of   economic   activities.   In   other   words,   it   relates   the   financial   result   of   an   economic   operation   to   the   investment   required   to   generate   that   result.   To   make   a   simple   example:   if   a   company   with   total   assets   of   30   million  dollars  makes  a  profit  (before  interest  expense)  of  3  million  dollars  in  a   particular  year,  the  return  on  the  money  invested  in  the  assets  of  that  company  is  

ten   per   cent.   The   return   is   important   because,   among   other   things,   it   enables   the   profits  of  economic  units  of  different  sizes  to  be  compared  in  a  rational  manner,   and   appropriate   investment   decisions   to   be   taken.   Absolute   profit   figures   do   not   tell   us   whether   the   businesses   involved   are   doing   well   or   poorly.   A   profit   of   1   million   may   be   a   brilliant   result   for   a   small   firm   but   a   catastrophe   for   a   company   twenty  times  its  size  with  assets  worth  100  million  dollars.  The  small  company   would  have  a  return  on  total  assets  of  20  per  cent,  while  in  the

 case  of  the  large   company  the  same  ratio  would  be  a  trifling  one  per  cent.  Other  examples  of  the   return  concept  are  ROS  (return  on  sales  or  margin)  and  ROE  (return  on  equity).   In   the   field   of   financial   investment,   return   may   be   used   as   a   synonym   for   yield.   An   example   is   total   return   to   shareholders,   which   relates   the   dividend   and   the  capital  gain/loss  of  a  given  year  (or  any  other  period  of  time)  to  the  price  of   the  share  involved.   In   economics,   the   expression   return   may   denote   the   physical   output   derived   from   a   combination   of   inputs.   The   observation  

that   the   successive   application   of   additional   units   of   a   variable   input   factor   (e.g   labour)   to   a   fixed   input   (e.g   land)   tends   to   generate   lower   and   lower   (marginal)   outputs   (eg   wheat)  referred  to  as  the  Law  of  Diminishing  Returns.       5   Source: http://www.doksinet Unit  2  –  Business  Organisations  II:  Legal  Framework     (11)  Sole  trader     Einzelkaufmann,  Einzelunternehmen     The  simplest  form  of  business  organisation  is  that  run  by  one  person.  It  is   known   as   a   sole   trader,   a   one-­‐man   firm   or,   in   American   English,   a   sole   proprietorship.   A   sole   trader   (sole   proprietor)  

provides   all   the   capital   required   (some  of  which  they  may  borrow),  makes  all  decisions,  and  bears  all  risks.  The   profit   he   makes   is   his   alone.   It   includes   elements   of   salary   capital   he   has   invested.  He  has  unlimited  liability,  ie  if  his  business  fails  his  private  fortune  can   be  called  upon  to  meet  his  business  debts.     This   type   of   organisation   is   suitable   for   small   businesses   in   retailing   and   particular  trades,  or  –  more  generally  –  wherever  the  element  of  personal  service   is   important   and   little   capital   is   needed.   The   advantages   are   flexibility,   quick   decisions,  

initiative   in   management,   and   a   relative   lack   of   legal   formalities   compared   with   other   traditional   forms   of   business   organisation.   However,   it   is   difficult   for   a   sole   trader   to   raise   additional   capital   in   order   to   expand   his   business,  and  to  be  his  own  buyer,  sales  manager,  accountant,  etc.,  all  in  one     It   is   important   to   note   that   Austrian   and   German   laws   are   relatively   restrictive   with   regard   to   the   kind   of   business   that   can   actually   be   operated   by   a   sole  trader.  In  these  two  countries,  this  form  of  business  organisation  is  available   only   to   a   person

  who   carries   on   a  Handelsgewerbe   for   his   own   account   (and   who   is  called  a  Kaufmann)  and  not,  for  instance,  to  a  self-­‐employed  professional  such   as   a   lawyer,   who   is   not   a   Kaufmann.  Just   for   the   record,   the   term   Kaufmann   is   misleading,   because   in   everyday   usage   it   refers   to   business   buying   goods   and   selling   them   without   substantial   transformation,   while   Kaufmann   as   defined   in   Austrian   or   German   law   also   includes   firms   producing   (and,   of   course,   buying   and  selling)  goods.       (12)  Partnership   Personengesellschaft     A   partnership   is   an   association   of   two   to

  twenty   individuals   who,   as   co-­‐ owners,   carry   on   a   business   for   the   purpose   of   making   a   profit.   Unlike   a   company,   it   has   no   legal   existence   separate   from   that   of   its   members.   Although   a   partnership  may  be  formed  by  tacit  agreement,  it  is  highly  desirable  that  a  tailor-­‐ made,   formal   partnership   agreement   (also   known   as   the   articles   of   the   partnership)  be  drawn  up,  in  which  the  rights,  powers  and  duties  of  all  partners   are  set  out.  The  contents  of  such  an  agreement  will  vary  with  the  nature  of  the   partnership  and  the  business  concerned,  but  are  likely  to

 include  the  following:     1. The  name  of  the  firm  and  the  names  and  the  addresses  of  the  partners   2. The  nature  of  the  business     6   Source: http://www.doksinet 3. The   capital   of   the   enterprise   and   the   contribution   to   be   made   by   each   partner  (either  in  cash  or  in  the  form  of  assets  and/or  services,  that  is,  in   kind).   4. The   extent   to   which   the   partners   are   to   take   part   in   managing   the   business.   5. The  proportion  in  which  the  profits  or  losses  are  to  be  shared   6. The  amounts  that  the  partners  may  withdraw  for  their  personal  use   7. The  interest  payable  on  loans  and

 drawings   8. The  duration  of  the  partnership  and  the  conditions  under  which  it  may  be   brought  to  an  end.   9. Provisions  for  its  dissolution     Partnerships   may   be   classified   into   general   and   limited   partnerships.   The   most   important   characteristic   of   a   general   partnership   is   that   all   members   –   referred  to  as  general  partners  –  have  unlimited  liability,  which  means  that  they   are   fully   liable   for   all   debts   and   obligations   of   the   firm,   and   that   even   their   personal   assets   can   be   called   upon   to   meet   any   business   debts.   This   is   true   of   both   acting   (or   managing)  

partners,   who   take   a   full   part   in   running   of   the   business,  and  silent  (or  sleeping)  partners,  if  any,  who  agree  to  contribute  capital   and  share  in  profits  or  losses  but  to  take  no  part  in  management.  Under  certain   circumstances   a   general   partner   may   have   to   meet   more   than   his   “share”   of   a   particular   obligation,   namely   in   cases   where   his   fellow   partners   are   unable   or   unwilling   to   meet   theirs   (joint   and   several   liability).   From   the   above   it   is   clear   that  a  silent  partner  in  a  British  general  partnership  is  not  the  exact  equivalent  of   a  stiller  Gesellschafter

 in  an  Austrian  stille  Gesellschaft,  the  main  difference  being   that   the   latter   has   only   limited   liability,   whereas   a   silent   partner   in   a   general   partnership   is   fully   liable.   To   avoid   confusion,   we   suggest   rendering   stiller   Gesellschafter  as  undisclosed  partner  (with  limited  liability).     The  limited  partnership,  which  is  very  rare  in  Britain  and  the  United  States,   has   two   different   types   of   partners:   general   partners,   with   unlimited   liability,   and   limited   ones,   whose   liability   is   restricted   to   the   amount   of   their   agreed   capital  contribution.  Every  firm  which  is  registered  as  a  limited

 partnership  must   have   at   least   one   general   partner.   Its   limited   partners   must   not   take   part   in   its   management.  A  new  –  and  apparently  more  popular  –  type  of  limited  partnership   is  the  limited  liability  partnership  (LLP).  As  the  name  suggests,  all  of  its  members   have   limited   liability,   but   are   nevertheless   allowed   to   play   an   active   role   in   managing  their  business.  Many  law  and  accounting  firms  now  operate  as  LLPs     The  situation  in  Austria  is  characterized  by  a  great  variety  of  partnerships,   including   civil-­‐law   partnerships   and   “professional   partnerships”   (Erwerbsgesellschaften),  

the   latter   being   tailored   to   the   needs   of   self-­‐employed   professionals  such  as  lawyers  and  tax  consultants.     The  two  main  advantages  of  a  partnership  –  as  compared  with  a  sole  trader   –   are   its   ability   to   raise   additional   capital   and   the   fact   that   duties   and   the   burden   of   any   losses   can   be   shared   among   its   partners.   On   the   other   hand,   the   most   obvious   disadvantages   are   the   general   partners’   unlimited   liability   and   the   sharing  of  any  profits  made.     7   Source: http://www.doksinet (13)  Company1  –  general  aspects   Kapitalgesellschaft     Companies   (US:   corporations)  

are   the   most   prominent   of   business   organisation  in  many  fields  of  the  economy.  This  is  borne  out  by  the  fact  that  the   majority  of  large,  medium-­‐sized  and  even  small  businesses  in  the  UK  and  the  US   are  run  as  companies.     A  company  in  the  private  sector  is  normally  formed  with  a  view  to  making   a  profit  for  its  members  by  engaging  in  manufacturing,  trading,  or  the  provision   of  services.  The  capital  of  such  a  company  is  divided  into  shares  It  is  raised  by   each   member   taking   a   certain   number   of   shares,   which   are   paid   for   in   cash   or,   occasionally   given   in  

exchange   for   some   other   consideration.   The   members,   called   shareholders   (UK,   US)   or   stockholders   (US),   share   in   the   company’s   profits,  typically  in  accordance  with  the  size  of  their  holdings.  Corporate  profits   are   usually   distributed   in   the   form   of   a   cash   dividend,   which   is   expressed   as   a   percentage  of  the  nominal  value  of  a  share.     A   company   is   a   legal   entity.   As   such,   it   is   the   owner   of   all   business   assets   and   liable   for   all   its   debts   and   obligations.   The   liability   of   its   shareholders   is   limited   to   the   issue   price   of   the   shares   held   by  

them.   Should   the   company   fail,   there  will  be  no  call  on  individual  shareholders  to  meet  its  debts,  provided  that   they  have  fully  paid  up  their  shares.  In  other  words,  a  shareholder,  is  personally   liable  only  for  any  amount  remaining  unpaid  on  the  shares  held  by  him.     Ultimate   control   of   the   company   is   in   the   hands   of   its   shareholders,   who   exercise   this   power   by   voting   at   meetings,   in   particular   at   the   annual   general   meeting   (AGM),   but   who   are   not   allowed   to   participate   in   management.   This   is   the   responsibility   of   the   board   of   directors   (elected   by,   and  

accountable   to,   the   shareholders)   and   of   paid   managers,   who   are   selected   from   among   the   directors   or  recruited  from  outside.     Most   countries   have   two   main   types   of   companies:   large   companies,   permitted  to  issue  shares  to  the  general  public  and  –  should  they  wish  –  to  have   them   traded   on   a   stock   exchange   (public   limited   companies   in   the   UK,   open   corporations   in   the   US,   Aktiengesellschaften),   and   smaller   companies,   where   ownership  is  restricted  to  one  or  a  few  shareholders  and  which  have  no  access  to   a   stock   exchange   (private  limited  companies  in   the   UK,   close

 corporations  in   the   US,  GmbH).       (14)  Company4  –  advantages  and  disadvantages   Kapitalgesellschaft  –  Vor-­‐  und  Nachteile     The  major  advantages  of  company  status  may  be  summarised  as  follows:   1. A   company   has   a   continuous   existence,   independent   of   its   members   or   directors.   2. Its   shares   are   freely   transferable   and   can   be   sold   without   affecting   its   capital  or  existence.     8   Source: http://www.doksinet   3. The   liability   of   its   members   is   limited   to   the   issue   price   of   the   shares   held   by   them.   This   encourages   individual   and   institutional   investors   to   put   their   money   not

  only   in   government   bonds,   but   also   into   corporate   equities.  Result:  economies  of  scale   The  following  are  the  disadvantages  of  a  company:   1. Publicity,   or   disclosure,   requirements   make   it   difficult   for   companies   to   conceal   their   business   affairs.   Their   books   must   be   available   for   inspection  by  their  members  and  the  general  public.   2. The   directors   and   managers   have   direct   control   over   its   affairs   without   being   effectively   accountable   to   the   real   “owners”   (divorce   of   ownership   from  control).   3. There   is   room   for   conflict   between   a   company’s   shareholders,   directors   managers  and  workers.

  4. There  may  be  a  lack  of  personal  contact  with  customers  and  employees   5. Companies  may  be  prone  to  slow  and  inflexible  decision-­‐making       (15)  Corporation2   Kapitalgesellschaft,  (börsennotierte)  Aktiengesellschaft,  Konzern     In  general,  an  American  corporation  is  the  equivalent  of  a  British  private  or   public  limited  company.  However,  the  term  is  normally  used  in  a  narrower  sense   and   refers   to   a   publicly   held   corporation.   Since   many   corporations   have   subsidiaries  it  may  also  denote  a  group  of  companies.       (16)  Corporation3   Wirtschaftliches  Unternehmen  der  öffentlichen  Hand     In   the   UK   the   term

  „corporation“   is   applied   to   a   public   corporation   i.e   a   business   organization   created   by   an   Act   of   Parliament   and   both   owned   and   controlled  by  the  government.       (17)  Share   Aktie     The   term   share   is   defined   as   any   of   the   equal   parts   into   which   a   company’s   capital  is  divided,  entitling  its  owner  a  proportion  of  the  profits  and  giving  him   certain  other  rights  e.g  to  vote  at  general  meetings  of  the  company  and  to  share   in  the  proceeds  of  a  voluntary  winding  up.     • Ordinary   (equity)   shares   (=equities,   common   stock   in   the   US)   represent   the   risk  

capital.   Normally,   with   a   voting   power,   but   the   issuance   of   non-­‐ voting  shares  also  possible  (class  A  shares).   • Preference  shares  carry  a  number  of  “privileges”,  are  usually  non-­‐voting.     9   Source: http://www.doksinet • Deferred   shares:   a   dividend   can   be   paid   only   after   all   other   kinds   of   shares   have   received   theirs;   usually   held   up   by   founders,   promoters   or   managers.     Shares   have   a   nominal   value   (=face/par   value).   Shares   can,   however,   also   be   issued   above   or   below   par   (premium/discount).   Share   below   par   are   legally   prohibited  under  Austrian  law.     • Bearer  shares

 are  passed  on  simply  by  delivery.   • Registered  shares  are  recorded  in  the  name  of  their  owners  in  the  books.   • Bonus   shares   are   proportionately   distributed   free   of   charge   among   the   shareholders  (as  a  result  of  capitalisation  of  reserves).   • Quoted,  unquoted,  fully-­‐paid,  partly-­‐paid,  industrial,  property  shares,  etc.       (18)  Shareholder   Aktionär,  Gesellschafter  einer  Kapitalgesellschaft     The  members  of  a  company  are  called  its  shareholders,  their  membership   coinciding   exactly   with   legal   ownership   of   its   shares.   The   normal   methods   of   becoming   a   member   are   by   “subscribing”   the   memorandum   of

  association   (the   subscribers  becoming  the  first  members),  by  applying  for  an  allotment  of  shares,   or   by   having   transferred   from   an   existing   member.   A   company’s   shareholders   are  often  said  to  be  its  “owners”.  In  a  strictly  legal  sense  this  is  not  true  They  are   the   owners   of   its   shares,   but   not   of   the   company   itself   nor   of   its   (net)   assets,   which  are  owned  by  the  company  as  a  legal  entity.     While   each   shareholder   enjoys   certain   individual   rights   vis-­‐à-­‐vis   the   company   (e.g   the   right   to   receive   dividends,   voting   rights),   the   power   to   influence   and  

control   company   policy   is   vested   in   all   the   members   collectively.   This   power   is   exercised   in   company   meetings,   officially   referred   to   as   general   meetings.  Normally,  such  meetings  are  not  well  attended,  and  the  few  members   with  large  holdings  tend  to  dominate  and  control  the  proceedings.     Although   ultimate   control   of   a   company   is   technically   in   the   hands   of   its   members   (i.e   the   shareholders),   they   do   not   have   any   power   to   participate   in   running   it.   Management,   supervision   and   day-­‐to-­‐day   control   over   the   company   are   vested   in   the   board   of   directors,   elected  

by,   and   responsible   to,   the   shareholders.   It   must   be   realised,   of   course,   that   the   directors   are   effectively   elected  by  those  members  with  the  largest  holdings.  The  board  of  directors  sets   general  policy  –  it  would  obviously  be  impossible  for  shareholders  to  do  this  in  a   complex,   modern   business   –   and   supervises   day-­‐to-­‐day   management,   which   it   delegates   to   paid   managers.   Although,   therefore,   it   is   correct   to   say   that   a   company   is   ultimately   controlled   by   its   shareholders   (whose   investment   is   at   risk),   the   real   distribution   of   power   is   frequently   quite   different,

  especially   in   large  companies.  It  is  true  that  directors  are  elected  by  shareholders  But  the  vast   majority   of   shareholders   are   either   unable   or   unwilling   to   attend   company   meetings.       10   Source: http://www.doksinet Unit  3  –  Corporate  Management  &  Culture     (19)  Management1   Geschäftsleitung,  Führungskräfte     The  term  management  refers  to  the  group  of  people  that  control  a  business   organisation,   in   particular   a   public   limited   company   or   a   corporation,   in   which   case   it   includes   the   executive   directors   and   the   managers   ranking   below   them.   Although  they  all  receive  a  salary  from

 their  company  like  other  staff,  managers   are   not   normal   employees   but   rather   represent   the   interests   of   the   company’s   “owners”   (i.e   its   shareholders)   vis-­‐à-­‐vis   its   workers,   unless   of   course   they   pursue  only  their  own  interests.  That  is  why  they  are  rarely  members  of  a  trade   union  but  have  their  own  organisations.  Modern  developments  have  somewhat   mitigated   this   antagonism   between   workers   (“us”)   and   management   (“them”),   although  it  can  still  be  found  in  many  traditional  firms.     A   company’s   management   is   commonly   divided   into   senior,   middle   and   junior  management,  although

 the  first  of  these  tiers  is  sometimes  split  into  two   separate  categories,  viz.  top  and  senior  executives  Senior  management  is  usually   led   by   the   chief   executive   officer   and   his   deputy,   who   work   closely   with   the   board   of   directors,   and   includes   the   heads   of   the   various   divisions   or   departments.  Below  them  is  the  middle  management  team,  to  whom  many  of  the   responsibilities  of  the  highest-­‐ranking  officers  are  delegated.  The  lowest  level  of   management   is   called   junior,   or   lower,   management.   For   instance,   a   company’s   highest-­‐level   financial   manager   belongs   to   the   senior   category,

  while   those   reporting   to   him   are   middle   managers.   Junior   managers   in   the   finance   department   will   include   bookkeepers   and   collection   managers,   while   foremen   and   quantity   supervisors   can   be   found   on   the   shop   floor   of   the   company’s   production  facility.       (20)  Management2   Unternehmensführung     Management   includes   all   activities   involved   in   running   a   business   organisation.  In  particular,  managers  are  concerned  with  preparing  and  making   decision,  and  ensuring  that  they  are  carried  out.  The  management  process  can  be   broken  down  in  various  ways,  but  most  books  on  management  list  some  or  all

 of   the  following  activities  as  essential  ingredients:   1. Identifying,  formulating  and  setting  objectives   2. Planning:  long-­‐term  (ie  strategic)  and  short-­‐term  (ie  tactical)  plans   3. Ensuring  the  maintenance  of  an  organisational  structure   4. Implementing  through  delegation,  motivation  and  commanding   5. Controlling,  comparing  results   6. Communicating   7. Establishing  and  maintaining  contacts     Qualitative   management   techniques   include   management   by   objectives,   management  by  results  and  management  by  exception,  while  network  analysis,     11   Source: http://www.doksinet simulation,   linear   programming,   risk   analysis   and   decision   trees   are   examples   of  

quantitative   techniques,   which   is   roughly   what   is   meant   by   the   expression   operation  research.     Management  styles  range  from  very  authoritarian  to  very  co-­‐operative.  The   second  style  recommends  itself  not  only  for  humanitarian  and  solidarity  reasons,   but   also   because   enterprises   with   co-­‐operative   management   style   are   more   likely   to   have   a   continuous   record   of   high   productivity,   as   Likert,   an   American   researcher,  has  shown.       (21)  Organisation   Organisation     Organisational   structures   can   be   described   in   terms,   either   of   the   basic   organisational   units   into   which   business   organisations   are

  divided,   or   of   the   formal   relationships   between   these   units.   The   structure   of   an   organisation   can   be  presented  graphically  in  the  form  of  an  organisation  chart,  with  boxes  for  its   units  and  lines  for  the  relationships  between  them.     Functional:   each   unit/department   is   responsible   for   a   special   activity,   or   function.   Examples:   purchasing,   production,   marketing   departments,   etc,   each   subdivided   into   units/sections   with   responsibility   of   a   particular   product   or   group  of  products.     Divisional:  the  basic  units  are  divisions,  each  concerned  with  a  (1)  product,   (2)   group   of   products,   (3)  

territory,   (4)   sub-­‐group   of   customers.   Each   division   itself  can  then  be  subdivided  into  functional  units.     The   distinction   between   a   line   organisation   and   a   line-­‐and-­‐staff   organisation   is   based   on   two   important   types   of   relationships   between   the   organisational   units   of   a   company.   A   line   relationship   between   two   units   implies   that  one  (superior  unit)  has  authority  to  give  commands  to  the  other  (subordinate   unit).   Thus,   there   is   a   chain   of   command   from   the   top   to   the   bottom   of   an   enterprise  in  a  line  organisation.  Each  unit  receives  commands  only  from  the  one  

above  it,  and  gives  commands  to  the  one  below  it.     Staff   relationships   are   of   an   advisory   or   service   nature.   The   marketing   manager   of   a   company,   a   line   manager,   may   be   assisted   by   a   marketing   research   unit,   reporting   to   him   but   having   no   line   authority,   i.e   no   authority   to   give   commands  to  other  units.  An  enterprise  having  both  line  and  staff  relationships   between  its  units  is  said  to  have  a  line-­‐and-­‐staff  organisation.     Other   forms   of   organisations   include   matrix   form   organisations,   profit   centres,  project  teams,  working  parties,  and  intrapreneurial  units.  Generally,

 the   more   hierarchical   and   centralised   types   of   arrangements   are   gradually   being   replaced   with   organisational   structures   that   put   more   emphasis   on   co-­‐operation   and  decentralisation.       12   Source: http://www.doksinet Organisational   procedures   are   those   formal   rules   that   govern   the   interaction  of  the  various  organisational  units,  and  the  great  variety  of  informal   relationships  between  these  units.       (22)  Line  management   Linienmanagement     Line   management   consists   of   all   those   managers   (line   managers)   directly   responsible  for  the  functional  activities  of  a  company,  e.g  purchasing,  production   or   marketing.  

The   word   line  indicates   that   they   have   authority   over   the   people   working  under,  and  reporting  to,  them.  Line  managers  have  to  be  distinguished   from   staff   managers,   who   head   staff   departments   such   as   legal   services   and   marketing  research,  and  whose  main  task  is  to  provide  advice  and  assistance  to   line  managers.  That  is  why  line  manager  can  also  mean  “superior”  or  “boss”       (23)  Staff2   Stab     Staff,   in   a   narrower   sense,   is   used   to   describe   those   people   in   a   large   organisation  who  are  not  in  the  direct  line  of  command,  but  provide  advice  and   assistance   to  

line   units   instead   of   carrying   out   operational   tasks.   Public   relations   and   marketing   research   departments   are   typically   examples   of   staff   units,   the   former  frequently  reporting  to  the  CEO  and  the  latter  to  the  marketing  manager   of  the  company  involved.       (24)  Corporate  culture   Unternehmenskultur     Corporate   culture   is  a  buzzword  in  management,  which  has  been  imported   from  the  US.  Its  increasing  popularity  reflects  the  fact  that  a  new  way  of  looking   at   business   organisations   has   finally   come   into   its   own.   Experts   have   come   to   believe  that  organisations  are  living  social  organisms  in

 which  a  decisive  role  is   played   by   individuals   and   groups   of   people,   with   their   emotional   needs,   beliefs   and  attitudes.     Corporate   culture   is   a   comprehensive   term   used   to   describe   the   soft   elements   in   a   business   organisation.   Every   company   has   a   kind   of   informal   corporate   philosophy,   i.e   a   set   of   basic   values   and   beliefs,   which   are   shared   by   most   of   its   members   and   pervade   all   its   activities.   They   determine   its   goals,   structures   and   procedures,   its   style   of   management,   and   the   way   in   which   its   members   interact   with   one   another   and   the   outside  

world.   Moreover,   every   business  firm  has  its  myths,  its  heroes  and  legends,  its  rites  and  customs,  and  a   certain  atmosphere,  which  are  all  related  to  its  core  values  and  beliefs  and  give  it   its  distinct  profile.       13   Source: http://www.doksinet Corporate   culture   is   not   just   another   management   tool;   it   has   a   life   of   its   own,   it   is   ultimately   not   amenable   to   manipulation.   They   may   develop   in   ways   that  clash  with  the  official  goals  of  profit-­‐oriented  organisations.  If  carried  to  its   logical   conclusion,   this   new   concept   may   well   break   the   mould   of   traditional   enterprises

 and  lead  to  an  entirely  new  era  of  business  life.       (25)  Intrapreneurship   Unternehmertum  im  Unternehmen     Intrapreneurship   is   a   fairly   new   management   technique.   It   involves   encouraging   entrepreneurial   behaviour   inside   large   business   organisations,   which   have   become   too   rigid   and   inflexible   for   quick   innovation.   The   usual   method   is   to   establish   separate   venture   groups   with   their   own   development,   production   and   marketing   units,   and   to   set   each   of   them   a   specific   task.   These   groups   are   kept   on   a   long   leash   and   normally   report   to   top   management,   bypassing  the  often  complex

 corporate  hierarchy.       (26)  Telecommuting   Telependeln     Telecommuting,   also   called   teleworking,   is   an   arrangement   under   which   regular   employees   work   primarily   off-­‐site,   either   at   home   or   from   a   satellite   office.   A   telecommuter’s   personal   computer,   often   provided   by   his   company,   is   hooked  up  with  the  firm’s  own  computer  system.  This  means,  on  the  one  hand,   that  he  has  direct  access  to  all  relevant  company  data  and,  on  the  other,  that  he   can  –  or  rather  has  to  –  transfer  worked-­‐up  data  back  to  the  central  office.     For   employees,   telecommuting   may   obviate   the  

need   to   spend   hours   and   hours  travelling  to  and  from  work,  thus  easing  congestion  on  roads  and  pressure   on   public   transport,   but   it   will   inevitably   reduce   the   opportunity   for   social   contacts.   Whether   this   type   of   alternative   work   schedule   makes   it   easier   to   square   one’s   job   with   private   life   (especially   looking   after   small   children)   is   a   moot   point.   A   lot   depends   on   the   children’s   age   and   the   telecommuter’s   personality.  For  some  people,  keeping  family  life  and  work  separate  may  prove   more  difficult  than  in  traditional  working  arrangements.     14     Source:

http://www.doksinet Unit  4  –  Human  Resources  I:  Personal  Management     (27)  Personnel  management   Personenwirtschaft     Personnel   management,   also   called   personnel   administration   or   human   resource(s)  management  (HRM),   is   the   application   of   the   management   process   to   a  company’s  human  resources.  More  specifically,  it  is  the  management  function   responsible   for   recruiting,   selecting,   training,   placing,   promoting,   rewarding,   motivating   and,   yes,   dismissing   employees   with   a   view   to   achieving   the   overall   goals  of  the  organisation  involved.     Personnel  management  is  an  all-­‐pervasive  function,  i.e  one  performed  not   only   by

  specialists,   but   by   anybody   managing   people.   It   can   therefore   be   found   both   in   large   organisations   with   a   personnel   manager,   who   is   responsible   for   some,   but   not   all,   matters   relating   to   personnel   management,   and   in   firms   without   such   a   position.   Moreover,   in   a   large   company,   most   executives   (such   as   works  and  sales  managers)  and  even  foreman  influence  and,  perhaps,  control  the   recruitment,  training,  promotion  and  pay  those  who  work  under  them,  although   they   will   be   assisted,   advised,   guided   and,   to   some   extent,   controlled   by   the   personnel  manager  in  doing  this.    

Personnel   management   is   influenced   by   certain   explicit   and/or   implicit   assumptions   about   human   behaviour   in   organisations.   Taylorism,   or   scientific   management,   with   its   heavy   emphasis   on   work   measurement   (e.g   by   time   and   motion  studies)  and  purely  monetary  incentives,  is  based  on  a  mechanistic  view   of   human   behaviour   and   regards   employees   simply   as   a   particular   form   of   input.   Other   management   philosophies,   such   as   the   Human   Relations   Movement   and   the   social   systems   model,   show   more   respect   for   employees   as   human   beings,   setting   greater   store   by   motivation,   job   satisfaction,   conflict

  solution,   co-­‐ operation,  and  worker  participation.       (28)  Personnel  consulting   Personalberatung     Finding   the   right   person   for   a   vacancy   in   a   business   organisation   is   a   difficult   and   time-­‐consuming   task,   especially   if   the   internal   search   process   has   produced   no   results.   That   is   why   more   and   more   companies   are   availing   themselves   of   the   services   offered   by   outside   specialists,   viz.   personnel   consulting   agencies.   Outsourcing   parts   of   the   human   resource   management   process   has   become   common   practice,   because   it   frees   internal   management   capacity   and   enables   enterprises   to  

concentrate   on   their   core   activities.   Personnel   consulting   agencies   are   particularly   useful   when   a   company   has   decided   to   enter   a   foreign   market   and   want   to,   or   must,   hire   local   staff.   Only   a   locally-­‐based   personnel   consulting   firm   or   the   local   office   of   an   international   agency  will  know  how  to  work  an  appropriate  job  advertisement  in  the  relevant   language,  where  to  place  it,  what  criteria  to  apply  in  screening  the  applications   received   and   interviewing   the   shortlisted   candidates,   or   how   to   organize     15   Source: http://www.doksinet assessment  centres.  The  recruiting  process  becomes

 even  more  complex  if  a  firm   has   to   find   a   top-­‐level   manager,   e.g   a   new   CEO   In   such   a   case,   it   is   often   not   possible   to   use   the   procedure   outlined   above;   instead,   the   personal   contacts   of   a   headhunter  (business  jargon  for  an  executive  search  specialist)  are  much  more   important.     Personnel   consulting   agencies   may   also   offer   personnel   development,   training,   and   similar   services.   Like   other   management   consulting   services,   personnel  consulting  is  not  cheap,  and  in  spite  of  heavy  competition  in  this  field   the  fees  charged  by  top-­‐notch  consultants  may  seem  exorbitant.  Some

 agencies   have  recently  switched  to  a  contingency  fee  system.  This  means  that  their  clients   have  to  pay  the  fee  in  question  only  if  the  agency  involved  actually  succeeds  in   filling  the  vacant  position  with  a  suitable  candidate.       (29)  Recruiting   Personalbeschaffung     Suitable  employees  can  be  recruited  internally,  i.e  the  personnel  manager   may  try  to  find  somebody  inside  his  company  to  fill  a  vacant  position,  or  vacancy.   In   many   cases   this   will   involve   the   promotion   to   a   higher   position   of   a   staff   member   who   has   shown   promise.   External   recruitment   means   going   outside   the   firm,

  e.g   by   running   job   advertisements   in   newspapers   and   magazines,   or   by   enlisting   the   help   of   specialists   such   as   government-­‐sponsored   employment   offices,   private   personnel   consulting   agencies,   or   executive   search   organisations,   the  latter  often  referred  to  as  headhunters.     The   search   process   normally   results   in   a   large   number   of   written   applications,   which   will   have   to   be   screened   to   eliminate   the   most   obvious   “misfits”   before   a   shortlist   of   suitable   candidates   can   be   drawn   up.   In   the   next   stage  of  the  selection  process  the  shortlisted  applicants  are  usually  invited  for

 a   job   interview.   In   addition,   they   may   be   asked   to   undergo   aptitude   tests   and/or   take   part   in   even   more   complex   evaluation   exercises,   like   assessment   centres,   to   enable   the   personnel   manager   and   other   executives   to   make   their   final   choice.   The   basic   purpose   of   the   final   stage   is   to   identify   the   ideal   candidate   by   comparing   the   company’s   requirements   with   the   skills,   attitudes,   and   (track)   record,  i.e  the  work  experience  and  achievements,  of  the  applicant  involved     It   should   not   come   as   a   surprise   that   recruiting   activities   have   lent   themselves   to   being  

conducted   via  the   Net.   Online   recruiting,   or   e-­‐recruiting,   has   grown   by   leaps   and   bounds,   with   50%   of   Internet   users   in   the   US   giving   paperless  job-­‐hunting  as  their  number  one  reason  for  going  on-­‐line.       (30)  Promotion2   Vorrückung,  Beförderung     Promotion  is  the  advancement  of  an  employee  to  a  higher  position,  i.e  an   upward  move  on  the  career  ladder.     16   Source: http://www.doksinet (31)  Redundancy   Abbau  (von  Arbeitskräften)     In   a   labour   context,   redundancy   refers   to   the   dismissal   of   employees   because  there  is  no  longer  any  work  for  them.  Redundancies  may  be  caused

 by   falling  demand  or  rationalisation,  and  should  not  be  confused  with  dismissals  for   other  reasons,  e.g  protracted  absenteeism,  theft,  or  unfitness  for  a  particular  job   The   term   is   used   in   this   sense   only   in   the   UK,   where   the   Redundancy   Payment   Act  of  1965  requires  an  employer  either  to  show  that  a  particular  dismissal  is  not   due  to  redundancy  or,  if  it  is,  to  pay  compensation.       (32)  Contract  of  employment   Arbeitnehmervertrag,  Dienstvertrag     A  contract  of  employment,  or  contract  of  service,  establishes  an  employer-­‐ employee   relationship.   In   the   UK,   it   can   be   made   in   any  

form,   ie   by   deed,   in   writing   or   orally,   although   under   the   Contracts   of   Employment   Act   of   1972   employers  must  give  their  employees  detailed  written  information  of  the  terms   of  their  employment.  These  terms  include:  rate  or  basis  of  remuneration;  hours   of   work,   holidays   and   holiday   pay,   sickness   and   sick   pay,   and   any   occupational   pension;   length   of   notice   to   terminate   employment;   and   the   employee’s   rights   in   respect   of   trade   union   matters   and   activities.   With   regard   to   hours   of   work,   various   arrangements   are   possible:   full-­‐time   employment,   flex(i)time,   telecommuting  and

 job-­‐sharing.     Like  any  other  contractual  agreement,  a  contract  of  employment  lays  down   or   implies   a   number   of   obligations   for   the   parties   involved,   i.e   the   employer   and   the   employee.   The   main   duties   of   the   employer   are   to   pay   the   agreed   remuneration,   to   reimburse   the   employee   for   expenditure   reasonably   and   properly   incurred,   and   to   indemnify   him   against   any   liabilities   arising   in   the   proper   performance   of   his   duties.   The   employee’s   responsibilities   include   his   duty  to  obey  any  lawful  instruction  of  his  employer,  to  exercise  care  and  skill  in   performing  his  tasks,  to

 conduct  himself  properly  (laziness,  negligence  and  bad   timekeeping   being   examples   of   misconduct)   and,   finally,   to   act   in   good   faith   all   the  time.     In   Britain,   termination   of   a   contract   of   employment   is   partly   regulated   by   the  Employment  Protection  Act  of  1975,  which  specifies  the  minimum  period  of   notice  to  which  a  full-­‐time  employee  is  entitled.       (33)  Employee  benefits   (Betriebliche)  Nebenleistungen,  (betriebliche)  Sozialleistungen     Employee   benefits   (often   called   benefits   or   fringe   benefits)   are   payments,   either  in  cash  or  in  kind,  made  to  an  employee  in  addition  to  his

 “normal”  wage   or   salary.   Such   benefits   may   be:   statutory,   ie   based   on   legal   provisions;   contractual,   i.e   incorporated   in   the   contract   of   employment;   or   voluntary,   which     17   Source: http://www.doksinet means   that   they   can   be   withdrawn   at   the   employer’s   discretion.   Examples   of   employee   benefits   are:   holidays   with   pay   (e.g   in   Austria),   subsidised   canteens,   free   use   of   recreational   facilities,   day   care   centres,   relocation   assistance,   non-­‐ contributory   occupational   pensions,   company   cars,   and   stock   options   (which   grant  managerial  personnel  the  right  to  purchase  a  specified  number  of  shares

 of   company  stock  at  a  favourable  price  during  a  predetermined  period  of  time).       (34)  Labour  turnover   Fluktuation,  Fluktuationsziffer,  Mitarbeiterfluktuation     Labour   turnover   –   or,   more   precisely,   the   rate   of   labour   turnover   –   is   a   measure   of   the   stability   or   instability   of   a   firm’s   workforce.   This   ratio   can   be   calculated  in  various  ways.  The  most  popular  method  is  to  express  the  number  of   workers   leaving   the   business   firm   during   a   specified   period   of   time   (usually   a   year)  as  a  percentage  of  its  average  workforce  for  the  same  period.  A  high  rate  of   labour

 turnover  means  that  the  workforce  is  unstable,  while  a  low  rate  obviously   means   the   opposite.   If   all   the   members   of   the   workforce   leave   the   enterprise   during   the   period   under   review   and   are   replaced   with   new   staff,   the   labour   turnover   is   100   per   cent.   In   view   of   the   disruptive   effects   of   large   numbers   of   people   leaving   and   joining   a   company,   and   given   the   high   cost   of   hiring   and   training   new   employees,   businesses   have   an   incentive   to   keep   their   labour   turnover  as  low  as  possible.       (35)  Flexitime   Flexible  Arbeitszeit,  Gleitzeit     Flexitime   is   an

  alternative   work   schedule   under   which   a   company’s   employees   choose   their   daily   arrival   and   departure   times   according   to   their   needs,  of  course  within  the  limits  defined  by,  or  agreed  with,  management.  This   arrangement  does  not  affect  the  standard  number  of  hours  that  each  employee  is   required   to   work   per   week   under   his   contract   of   employment.   Flexitime   work   schedules   are   characterized   by   core   periods,   during   which   attendance   is   mandatory  for  all  employees,  and  flexibands,  i.e  periods  during  which  they  may   choose  to  be  present  or  not.  There  are  many  variations  of  this  basic  scheme

 One   is  flexitime  by  the  month  or  by  the  year,  which  offers  the  participating  employees   even  more  flexibility  through  credit  hours.     Whichever  arrangement  is  chosen,  flexitime  involves  both  advantages  and   disadvantages   for   employees   and   employers.   Thus,   staff   benefit   as   it   normally   improves  the  quality  of  their  lives,  increases  job  satisfaction  by  giving  them  more   control  and  makes  it  easier  for  them  to  square  working  life  and  personal  needs.   This  last  aspect  is  particularly  important  for  single  mothers  and  employees  with   small  children.  The  benefits  to  employers  come  in  the  form  of  fewer

 short-­‐time   employee   absences,   higher   productivity,   and   more   intra-­‐company   interaction.   However,   communication   and   co-­‐ordination   may   become   more   difficult,   time-­‐ recording   may   turn   out   to   be   more   complicated,   and   certain   overheads   (e.g   additional   heating   and   lightning)   may   increase.   For   employees   there   are   few     18   Source: http://www.doksinet disadvantages,   although   sometimes   the   introduction   of   flexitime   may   lead   to   a   reduction  of  overtime.       (36)  Worker  participation   Arbeitnehmermitbestimmung     Worker,   or   employee,   participation   is   based   on   the   idea   that   working   people   should   be  

involved   in   decisions   affecting   their   working   lives,   instead   of   simply   carrying   out   commands   which   are   passed   down   to   them   from   higher   levels  of  management,  and  which  they  may  not  even  fully  understand.     Worker   participation   may   be   implemented   at   various   levels   in   a   business   organisation.  Shop-­‐floor  participation,  for  instance,  involves  workers  engaged  in   the   actual   production   and/or   distribution   of   goods   and   allows   them   greater   freedom   to   organize   their   work.   In   the   case   of   boardroom   participation,   the   workers,   through   their   representatives,   take   part   in   the   consultations   and  

decision-­‐making  of  the  board  of  directors,  laying  down  the  fundamental  objects   of   the   company,   reviewing   and   approving   the   corporate   plans,   deciding   about   mergers,   takeovers,   acquisitions   and   divestitures,   etc.   Worker   directors,   as   these   representatives   are   called,   are   rare   in   Britain   since   worker   representation   on   company   boards   is   optional.   In   Germany   and   Austria,   by   contrast,   the   law   requires   one   third   –   or   in   some   German   industries   even   half  –   of   the   members   of   the   supervisory   boards   of   large   companies   to   be   workers’   representatives.   Worker  participation  may  be

 regarded  as  part  of  a  wider  movement,  seeking  to   apply   the   principles   of   political   democracy   to   other   fields   of   life,   and   is   therefore   often  referred  to  as  industrial  democracy.         19   Source: http://www.doksinet Unit  5  –  Human  Resources  II:  Industrial  Relations     (37)  Industrial  relations   (Institutionalisierte)  Arbeitgeber-­‐Arbeitnehmer  Beziehungen     The   term   industrial   relations   (US:   labor   relations)   does   not,   as   might   be   supposed,   refer   to   the   relationships   between   industries,   or   between   business   firms  within  a  given  industry,  but  to  those  between  the  two  sides  of  industry,  viz.  

labour   and   management,   within   the   framework   provided   by   government.   In   British   usage,   it   is   normally   restricted   to   the   collective   dealings   between   employers  and  employees,  or  rather  between  employers’  associations  and  trade   unions,   while   the   expression   human   relations   describes   certain   aspects   of   the   interaction   between   individual   workers   and   their   employers.   Therefore,   industrial  relations   is   concerned   with   collective   bargaining,   national   or   industrial   wage  rates,  trade  union  recognition,  incomes  policy,  and  related  matters.  In  the   UK,   industrial   relations   used   to   be   characterised   by   conflict   and  

industrial   action   (such  as  strikes),  while  the  Austrian  system  (called  Sozialpartnerschaft)  put  and   –   in   spite   of   recent   political   developments   –   still   puts   a   premium   on   negotiations   and  compromise.       (38)  Trade  association   Fachverband     A   trade   association   is   an   organisation   set   up   by   firms   in   a   particular   industry.  It  is  formed  for  the  purpose  of  protecting  the  interests  of  its  members,   especially  by  representing  them  in  negotiations  with  government,  trade  unions,   or  other  trade  associations.       (39)  Trade  union   Gewerkschaft     Trade   unions   (called   labor  unions  in   the   US)  

are   voluntary   associations   of   employees   created   for   the   purpose   of   protecting   the   interests   of   all   members,   especially  vis-­‐à-­‐vis  their  employers,  in  such  areas  as  wage  rates,  working  hours,   working   conditions,   or   redundancies.   In   general,   they   try   to   achieve   their   goals   not   only   by   negotiating   with   employers’   organisations   or   individual   employers,   but   also   by   taking   industrial   action,   if   necessary   (e.g   organising   strikes   or   go-­‐ slows).  However,  many  unions  additionally  engage  in  other  activities  They  may,   for   instance,   provide   educational   and   welfare   services   to   their   members  

(vocational   training,   strike   pay,   holiday   homes,   etc.)   or   support   individual   politicians   and   political   parties   in   order   to   motivate   them   to   further   the   cause   of   labour  on  the  parliamentary  level.     Nowadays,  we  take  the  right  of  workers  to  establish  and  join  trade  unions   for  granted.  It  is  often  forgotten  that  this  right  of  combination  had  to  be  fought   for.  In  Britain,  for  instance,  some  40  laws  prohibiting  the  formation  of  unions  in   various  trades  were  not  repealed  until  1824.     20   Source: http://www.doksinet   Trade   unions   can   be   formed   by   combining   workers   in   a   particular  

craft   (craft   union),   in   a   particular   industry   (industrial   union)   or   according   to   some   other  principle  (e.g  white-­‐collar  union)  Individual  unions  are  usually  affiliated  to   some   national   federation   or   umbrella   organisation   (such   as   the   Trade   Union   Congress/TUC  in  the  UK  or  the  American  Federation  of  Labour  and  Congress  of   Industrial   Organisations/AFL-­‐CIO   in   the   US)   to   discuss   and   solve   problems   common  to  them  all.     An   objective   assessment   of   the   trade   union   movement   is   difficult   if   not   impossible,   since   unions   inevitably   have   to   take   sides.   So   we   can   only   offer   a  

personal   view.   It   is   probably   safe   to   say   that   many   of   the   basic   rights   enjoyed   by   the  working  people  would  not  exist  but  for  trade  union.  On  the  other  hand,  these   have   lately   shown   a   tendency   to   become   rigid,   undemocratic   and   inflexible   –   qualities   which   are   particularly   unfortunate   in   view   of   the   rapid   structural   change,   which   many   economies   are   undergoing   at   the   moment.   This   does   not   mean   that   unions   should   be   abolished.   It   simply   means   that   they   should   be   reformed,  preferably  from  within,  and  that  they  should  change  their  strategy.  It   is  probably

 misguided  and  counter-­‐productive  to  try  to  protect  jobs  in  declining   industries.   Trade   unions   should   rather   insist   on   the   creation   of   new   jobs,   and   on   retraining  or  removal  grants  for  their  members.  But  this  is  easier  said  than  done,   especially   if   an   industry   is   suddenly   threatened   with   a   large   number   of   redundancies.       (40)  Strike   Streik     A   strike   is   a   concerted   stoppage   of   work   as   a   protest   by   workers   against   low  wages,  poor  working  conditions,  redundancies,  plant  closure,  or  some  other   ground  for  dissatisfaction.  It  may  continue  until  the  workers’  demands  have

 been   met,   or   the   other   party   to   the   dispute   agrees   to   have   formal   discussions   or   negotiations.   A   strike   that   has   been   ordered   or   condoned   by   the   relevant   trade   union  is  referred  to  as  an  official  strike,  while  one  that  has  not  been  so  endorsed   is  termed  unofficial  or  wildcat.  A  strike,  or  walkout,  as  it  is  sometimes  called,  is   labour’s  most  powerful  weapon  in  an  industrial  dispute.     One   aspect   of   strikes   that   has   attracted   a   lot   of   attention   lately   is   picketing.   Pickets   are   workers   stationed   outside   a   place   of   business   during   an   industrial   dispute   to

  inform   the   public   and   dissuade   other   workers   from   entering.   Secondary   picketing,   i.e   picketing   by   people  not   directly   involved   in   a   strike,   has   been  outlawed  in  the  UK.       (41)  Work-­‐to-­‐rule   Dienst  nach  Vorschrift,  Aktion  ‚Vorschrift’     Work-­‐to-­‐rule  is  a  form  of  industrial  action  in  which  the  employees  involved   remain  at  work,  but  slow  down  operations  by  observing  the  regulations  relating     21   Source: http://www.doksinet to  their  work  strictly  and  literally.  In  contrast  to  a  go-­‐slow,  work-­‐to-­‐rule  does  not   constitute   a   breach   of   the   contract   of   employment,   and   is

  therefore   a   safe   and   efficient  measure  of  putting  pressure  on  an  employer.       (42)  Lock-­‐out   Aussperrung  (von  Arbeitern)     If   an   employer   involved   –   either   directly   or   indirectly   –   in   an   industrial   dispute  closes  down  his  firm  and  prevents  his  employees  from  performing  their   work  (and  earning  their  wages)  the  action  is  called  a  lock-­‐out.  Lock-­‐outs,  which   are   practically   unknown   in   Austria,   were   not   unusual   in   Germany,   where   employers   in   a   particular   industry   used   to   retaliate   against   a   partial   strike   by   locking  out  the  workers  of  firms  not  affected  by  it.  

    (43)  Wage   Lohn     In   the   broadest   sense,   the   term   wage   refers   to   the   income   derived   from   dependent   employment,   which   at   this   level   is   contrasted   with   other   factor   incomes  such  as  profit  and  rent.  In  a  narrower  sense,  this  expression  is  applied   to  the  income  of  blue-­‐collar  employees  and  should  be  distinguished  from  salary,   which  denotes  the  income  of  white-­‐collar  (or  salaried)  employees.     Another   useful   distinction   is   the   one   between   wage(s)   and   earnings.   The   term   wage(s)  is   usually   restricted   to   the   remuneration   received   for   a   standard   working   week   (or   any

  other   unit   of   time   chosen   as   a   basis   for   paying   wages),   while   earnings   include   wages   in   this   sense   and,   in   addition,   overtime   pay   and   employee  benefits.  It  is  also  important  to  distinguish  between  nominal  and  real   wages.  The  former  are  expressed  in  monetary  terms,  while  real  wage  denotes  the   amount  of  goods  and  services  that  can  be  bought  for  a  given  nominal  wage.     Wages  play  an  extremely  important  role  in  the  economic  life  of  a  country,   because   they   represent,   on   the   one   hand,   the   main   source   of   income   for   the   majority   of   the   working   population   and,   on

  the   other,   an   important   cost   element   for   business   organisations.   The   level   of   wages   directly   affects   not   only   the   standard   of   living   of   employees   but,   since   it   is   a   major   determinant   of   profits,   also   that   of   employers   as   well   as   the   volume   of   investment.   Thus,   inevitably,   there   is   a   constant   tug-­‐of-­‐war   between   employers   and   employees,   with   the   former   trying   to   push   wages   up   and   the   latter   to   keep   them   down.   The   actual   level  of  wages  at  any  given  time  is  therefore  determined  by  the  balance  of  power   in   this   struggle,   the   outcome   being  

decided   by   such   factors   as   demand   for,   and   supply  of,  labour,  the  economic  situation,  profit  margins,  trade  union  power  and   policy,  and  negotiation  skills.  In  most  countries,  the  government  is  also  a  force  to   be   reckoned   with.   Most   governments   pursue   some   kind   of   incomes   policy,   eg   setting   minimum   wages,   imposing   wage   freezes,   or   mandating   compulsory   arbitration.       22   Source: http://www.doksinet (44)  Wage  systems   Lohnformen     Wages   are   paid   in   two   main   ways:     by   time   (time   rates)   or   by   piece,   i.e   output   (piece  rates).   Time   rates   are   usually   in   the   form   of  

hourly,   shift   or   weekly   rates  for  a  specified  number  of  hours.  They  are  suitable  for  precision  work  and   dangerous   work,   where   a   wage-­‐induced   increase   in   speed   may   lead   to   lower   quality  and  a  higher  rejection  rate  or  to  more  accidents.  But  this  method  is  also   used   for   work   involving   a   large   number   of   different   activities,   where   output   is   difficult   to   measure   (e.g   repair   work   or   materials   handling)   In   some   cases,   time   rates   are   combined   with   a   bonus   element   (bonus   system).   Ideally,   time   rates   induce  employees  to  work  more  carefully,  but  they  may  encourage

 loitering  and   idleness   if   the   employer   does   not   use   other   (non-­‐monetary)   incentives   or   disincentives  to  maintain  a  reasonable  level  of  output.     In  the  case  of  piece  rates,  the  remuneration  paid  to  a  given  worker  depends   on   the   output   produced   within   a   given   period   of   time   by   him   or   by   a   group   of   workers   of   which   he   is   a   member.   This   is   the   least   sophisticated   version   of   piece   rates.   Most   firms   use   slightly   more   complicated   methods,   for   instance   the   task   system  of  pay,  which  is  based  on  a  standard  time  allowance  for  a  particular  job   or   task.

  Under   this   arrangement,   an   employee   working   very   quickly   during   an   eight-­‐hour  working  day  may,  for  instance,  be  paid  for  ten  hours.  In  a  variant  of   this  scheme,  a  bonus  is  paid  for  any  time  saved  on  the  allowance.  Piece  rates  and   the   bonus   system   are   often   referred   to   as   payment   by   result   or   incentive   payments,   since  their  main  purpose  is  to  induce  employees  to  work  harder.  The   piece-­‐rate   system   is   a   controversial   method   of   remuneration.   On   the   other   hand,   it   may   enable   an   efficient   worker   to   earn   more   but,   on   the   other   hand,   it   may   become  a

 dehumanising  form  of  exploitation.       23   Source: http://www.doksinet Unit  6  –  Business  Transactions  I:  Inquiries  &  Offers     (45)  Inquiry   Anfrage     Many   business   transactions   start   with   an   inquiry   (also   spelled   enquiry)   relating  to  goods  or  services.  This  is  usually  a  letter  addressed  by  a  prospective   customer,  or  prospect,  to  a  supplier.     In   a   letter   of   inquiry,   prospective   buyers   have   to   state   simply,   clearly   and   concise   what   they   want   –   sales   literature   (e.g   catalogues,   leaflets),   price   lists,   samples,   quotations,   estimates,   and   so   on.   As   the   majority   of   such   letters

  are   short   and   simple,   many   forms   have   adopted   the   practice   of   sending   printed   inquiry   forms,   thereby   eliminating   the   need   of   letters.   It   is   also   possible   for   prospects  to  make  inquiries  by  telephone,  telex,  fax  or  e-­‐mail.  Businesspeople,  as   a  rule,  send  inquiries  to  several  likely  suppliers,  as  they  want  to  find  out  which  of   them   offers   the   best   quality,   the   most   favourable   prices   and   terms,   etc.   From   a   legal   point   of   view,   it   is   important   to   note   that   an   inquiry   is   without   any   obligation  for  the  inquirer.     Inquiries   may   be   either   general   or  

specific.   In   a   general   (or   routine)   inquiry,   the   prospective   buyer   merely   asks   the   supplier   to   provide   general   information   on   the   products,   such   as   catalogues,   leaflets,   price   lists   and,   where   appropriate,  samples.   In   a   specific   (or   special)   inquiry,   the   prospect   indicates   his   interest   in   receiving   a   detailed   offer,   including   prices,   terms   of   payment   and   terms  of  delivery.  In  addition  to  this,  if  he  has  a  special  request  –  for  example,  if   he   wants   to   be   granted   a   concessional   price   for   regular   orders,   or   exclusive   selling  rights  for  a  particular  area  –  his

 inquiry  should  specify  full  details  of  his   requirements.       (46)  Offer2  (of  goods)   Anbot,  Angebot,  (Waren-­‐)Offerte     By   submitting   an   offer   (also   referred   to   as   a   quotation)   the   offeror,   i.e   a   particular   seller,   declares   his   willingness   to   sell   certain   specific   goods,   at   a   specified   price   and   on   specified   terms.   Such   an   offer   can   be   made   orally   or   in   writing.   A   verbal   offer   should   be   confirmed   by   letter   An   offer   is   frequently   prepared   on   a   printed   form   (quotation   form),   which   is   mailed   either   with   or   without  a  covering  letter.  It  may  be  submitted

 in  response  to  an  inquiry  (solicited   letter),  or  without  an  inquiry  having  been  made  (unsolicited,  or  voluntary  offer).     A  complete  offer  should  cover:   1. nature  and  quality  of  the  goods  offered,   2. quantity,   3. price(s)  and  any  discounts,   4. delivery  period,   5. terms  of  delivery,   6. terms  of  payment     24   Source: http://www.doksinet   Many   communications   that   are   called   offers   in   commercial   practice   (e.g   offers  without  engagement)  are  not  offers  in  the  legal  sense  of  the  word.       (47)  Terms  of  delivery   Lieferbedingungen     Terms  of  delivery  are  provisions  in  a  contract  of  sale  stipulating  the  time,

  place   and   mode   of   delivery   of   the   goods.   In   international   trade,   the   place   and   mode   of   delivery   are   usually   specified   by   standardised   trade   terms,   e.g   INCOTERMS).     The  following  are  a  few  examples  of  terms  of  delivery  which  may  be  found   in  a  business  letter:   1. At  present  our  time  of  delivery  is  two  to  three  weeks   2. Delivery  will  be  effected  fob  Hamburg   3. Delivery  is  to  be  made  not  later  than  Oct  10   4. Delivery   can   be   effected   in   Vienna   within   four   weeks   after   receipt   of   order.   5. Please  arrange  for  the  goods  to  be  sent  by  air     (48)  INCOTERMS  

INCOTERMS     International   Commercial   Terms   are   a   set   of   international   rules   for   the   interpretation   of   specified   trade   terms   used   in   export   sales.   They   were   first   published   by   the   ICC   (International   Chamber   of   Commerce)   in   1936.   Certain   amendments  were  made  since  then.     The   main   purpose   of   these   trade   terms   is   to   help   the   parties   to   an   international  contract  of  sale  to  define  the  contract  price  more  accurately.  This  is   achieved   by   specifying   (1)   the   method   of   delivery,   (2)   the   duties   of   both   seller   and  buyer,  and  (3)  the  point(s)  up  to  which  the  costs

 and  risks  of  the  goods  are   to  be  borne  by  the  seller  and  from  which  they  must  be  borne  by  the  buyer,  i.e  the   point(s)  where  these  costs  and  risks  pass  from  one  party  to  the  other.  Costs  of  the   goods   in   this   context   does   not   mean   the   cost   price   of   the   goods,   but   all   costs   incurred  in  getting  them  to  the  place  of  destination,  such  as  the  cost  of  packing,   all  loading  and  unloading  charges,  or  the  cost  of  insurance.     Without  an  indication  of  the  point(s)  where  the  costs  and  risks  pass  from   the  seller  to  the  buyer,  a  price  quotation  would  be  completely

 meaningless.  Two   of  the  options  available  under  INCOTERMS  are  based  on  whether  the  goods  have   to  be  picked  up  by  the  buyer  at  the  seller’s  premises,  or  whether  the  seller  has  to   deliver  them  to  the  buyer’s  address  and  bear  the  costs  and  risks  involved.  If  the   expression  ex  works  is  added  to  the  price  quotation,  then  all  costs  and  risks  are   transferred   at   the   seller’s   premises   (e.g   his   warehouse   or   factory)   In   other   words,  the  costs  of  shipping  the  consignment  to  the  buyer’s  location  and  the  cost   of   insuring   it   must   be   borne   by   the   buyer   and   are   therefore  

excluded   from   the     25   Source: http://www.doksinet price.   The   other   extreme   is   represented   by   delivered   duty   paid       Under   this   clause,  the  costs  and  risks  pass  at  the  place  of  destinations  specified  after  delivery   duty   paid,   and   the   price   quoted   accordingly   includes   all   costs   up   to   that   point.   Under  some  INCOTERMS,  the  points  where  the  costs  and  risks  are  transferred  do   not   coincide.   This   is   the   case   with   CIF,   freight/carriage   paid   to,   and   freight/carriage   and   insurance   paid   to     .   From   what   has   been   said   so   far   it   should   be   clear   that   INCOTERMS   do  

not   determine   the   passing   of   title   to   the   goods  involved.     The   application   of   INCOTERM   clauses   is   absolutely   voluntary.   However,   INCOTERM  does  help  to  avoid  misunderstandings  and  disputes  in  international   trade.   In   some   instances,   INCOTERMS   are   used   as   a   basis   for   calculating   the   purchase  price,  while  delivery  of  goods  is  governed  by  other  terms.  Any  special   provisions   in   an   individual   contract   can   override   whatever   is   stipulated   in   the   rules.   Contracting   parties   may   adopt   INCOTERM   clauses   as   a   general   basis   for   their  contracts,  but  they  may  also  agree  on  particular  variations

 of  them.     Although   INCOTERMS   are   primarily   designed   for   export   sales,   the   following   may   also   be   used   in   domestic   transactions:   ex  works,  freight/carriage   paid  to,  free  carrier.       (49)  Ex  works,  EXW     Ab  Werk     The  seller’s  sole  responsibility  is  to  make  the  contract  goods  available  at  his   premises  (e.g  works  or  factory),  which  means  that  it  is  not  his  duty  to  load  them   on  the  vehicle  provided  by  the  buyer,  unless  otherwise  agreed.  The  buyer  bears   all  costs  and  risks  involved  in  transporting  the  goods  to  the  desired  destination.   This  clause  thus  represents  the  minimum

 obligation  for  the  seller.     The  seller  must:   • Supply  the  goods  in  conformity  with  the  contract  of  sale.   • Place  them  at  the  buyer’s  disposal,  at  the  time  stipulated  and  at  the  point   of  delivery  named.  The  seller  must  inform  the  buyer  in  good  time  of  the   local  address  at  which  the  items  sold  are  ready  for  collection.   • Bear   the   costs   of   any   checking   operations   (quality   check,   measuring,   weighing  and  counting).     The  buyer  must:   • Take  delivery  of  the  goods  as  soon  as  they  have  been  put  at  his  disposal  at   the   place   and   time   stipulated,   and   pay   the   price   as

  provided   for   in   the   contract.   • Bear  all  costs  and  risks  from  the  time  they  are  placed  at  his  disposal,  e.g   loading,   transporting,   cargo   insurance   costs,   risks   of   loss   or   damage   in   transit.   • Provide   any   export   license   at   his   own   risk   and   expense,   and   pay   any   customs   duties   and   taxes   that   may   be   levied   in   connection   with   exportation.     26   Source: http://www.doksinet (50)  Free  on  Board,  FOB   Frei  an  Bord     The  seller  undertakes  to  place  the  contract  goods  on  board  a  vessel  at  the   port   of   shipment   named   in   the   contract.   The   risks   pass   from   the   seller

  to   the   buyer  when  they  cross  the  ship’s  rail.     The  seller  must:   • Notify  the  buyer  that  the  goods  have  been  delivered  on  board.   • Obtain  any  export  license  that  may  be  required.   • Bear  the  shipping  charges  (e.g  dock  dues,  wharfage,  porterage,  lighterage   at  the  port  of  departure).     The  buyer  must:   • Charter  a  vessel  –  or  reserve  the  necessary  space  on  board  a  vessel   –   and   inform   the   seller   of   its   name   and   the   loading   date.   In   other   words,   the   buyer   must   contract   with   a   sea   carrier   for   carriage   of   the   goods   to   the   port   of   destination,   pay  

the   freight,   and   inform   the   seller   of   the   arrangements  made.   • Bear   the   following   costs:   port   rates;   falling   dues   when   the   carrying   vessel   leaves  port;  stowage  of  the  goods  on  board  ship;  loading  costs,  but  only  to   the   extent   that   they   are   included   in   the   freight;   cargo   insurance;   import   duties;   and   all   landing   and   delivery   charges   (dock   dues,   wharfage,   porterage,  lighterage  at  the  port  of  departure  at  the  port  of  destination).       (51)  Cost,  Insurance  and  Freight,  CIF   Kosten,  Versicherung,  Fracht     The   seller   must   bear   all   costs   and   freight   charges   necessary   to  

bring   the   goods  to  the  named  port  of  destination  and  procure  marine  insurance  against  the   risk   of   loss   or   damage   during   carriage.   The   seller’s   responsibility   for   the   items   ends   when   he   delivers   them   on   board   ship   into   the   shipowner’s   custody   at   the   port  of  shipment.     In   contrast   to   an   FOB   contract,   it   is   the   seller’s   duty   to   enter   into   a   contract   of   carriage   (by   sea)   with   a   shipping   company,   and   he   must   bear   all   costs   thereby   incurred;   to   provide   a   warehouse-­‐to-­‐warehouse   insurance;   to   provide   war   risk   insurance  when  requested  from  the

 buyer.       (52)  Delivered  Duty  Paid,  DDP     (Geliefert  verzollt)     Seller’s  maximum  obligation:  all  costs  and  risks  up  until  the  final  delivery  at   the   buyer’s   premises   are   carried   by   the   seller,   including   costs   of   import   duties,   license,  etc.         27   Source: http://www.doksinet (53)  Terms  of  payment   Zahlungsbedingungen     The   main   purpose   of   terms   of   payment   is   to   define,   in   greater   detail,   the   price  agreed  between  the  buyer  and  the  seller  by  specifying  the  time  place  and   method  of  payment,  as  well  as  any  discounts.  Terms  of  payment  are  negotiable   between   the   contracting

  parties,   and   may   be   laid   down   explicitly   in   greater   detail.   There   are   also   “quasi-­‐standardised”   terms,   which   normally   specify   only   one   or   two   of   the   possible   and   necessary   elements.   The   terms   payment   in   advance   and   cash   with   order,   for   instance,   provide   information   on   the   time   of   payment,  while  remaining  silent  on  where  and  how  payment  has  to  be  made,  and   on   whether   or   not   any   discounts   are   applicable.   Documents   against   payment   (D/P)  indicates  that  the  amount  owed  to  the  seller/exporter  has  to  be  paid  by  the   buyer/importer  when  specified  documents  representing

 the  contract  goods  are   handed   over   to   him.   This   means   that   D/P   details   the   time   and   method   of   payment.   The   UN   is   currently   to   remedy   the   situation   by   drawing   up   and   recommending  a  set  of  fully  standardised  terms  of  payment  (PAYTERMS).       (54)  Discount   Preisnachlass,  Skonto,  Rabatt     Discount  may  be  defined  as  a  reduction  in  a  list  or  invoice  price.  The  most   important   types   of   discount   are:   cash   discounts,   quantity   discounts,   trade   discounts  and  seasonal  discounts.       (55)  Cash  discount   Skonto     Where   goods   or   services   are   sold   on   credit,   it   is   quite  

common   for   the   supplier   to   offer   the   buyer   a   cash   discount   as   an   incentive   for   early   payment.   This   discount   –   usually   2   or   3   per   cent   –   may   be   deducted   from   the   invoice   price   if   payment   is   effected   within   a   stated   period   of   time   (discount  period).   The   terms   2/10,   net   30,   for   example,   indicate   that   a   two   per   cent   cash   discount   will   be   allowed  for  payment  within  ten  days  of  the  date  of  invoice.  However,  should  the   buyer   fail   to   settle   the   invoice   within   the   discount   period   of   ten   days,   he   must   pay  the  full  amount  within  30

 days.     It  is  important  to  note  that  a  cash  discount  represents  implicit  interest  on   the   trade   credit   involved   in   a   sale   on   deferred   terms.   If   a   buyer   takes   a   cash   discount   offered   to   him,   there   is   no   cost   for   using   the   trade   credit   during   the   discount  period.  However,  if  a  cash  discount  is  offered  and  not  taken,  there  is  a   definite  opportunity  cost.  In  the  example  mentioned  above,  the  buyer  has  use  of   the   funds   for   an   additional   20   days   if   he   does   not   take   the   cash   discount,   but   instead   pays   on   the   final   day   of   the   credit   period.  

In   the   case   of   a   100   dollar   invoice,  he  would  have  the  use  of  98  dollars  for  20  days.  On  the  basis  of  a  360-­‐ day  year,  the  annual  interest  cost  is  36.7  per  cent  (2/98  x  360/20)  This  shows   that,   in   cases   where   a   cash   discount   is   granted,   trade   credit   can   be   a   very     28   Source: http://www.doksinet expensive  form  of  short-­‐term  financing,  and  that,  conversely,  availing  oneself  of   such   a   discount   can   be   very   profitable,   even   if   a   bank   loan   has   to   be   taken   out   to   effect  early  payment.       (56)  Seasonal  discount   Saisonrabatt     A  seasonal  discount

 is  a  price  reduction  of  a  certain  percentage  given  to  a   customer  who  places  an  order  during  the  slack  season.  An  illustrative  example  is   provided  by  the  tourist  industry,  which  offers  its  services  at  lower  prices  during   the  off-­‐season.  Season  discounts,  however,  are  not  limited  to  service  industries   They  are  frequently  offered  by  manufacturers  because  off-­‐season  orders  enable   them  to  make  better  use  of  their  production  facilities  (e.g  manufacturers  of  air-­‐ conditioners).   In   addition,   retailers   grant   such   discounts   in   order   to   clear   residual  stocks  of  seasonal  goods,  prices  of  sports  articles  being

 adjusted  for  this   purpose.       (57)  Quantity  discount   Mengenrabatt     Also   known   as   bulk   discount,   quantity   discount   is   a   reduction   on   the   list   price   of   goods   which   depends   on   the   quantity   purchased.   Such   discounts   are   justified   on   the   grounds   of   economies   of   scale.   Orders   for   large   quantities   can   lead   to   lower-­‐cost   production   runs   and   lower   costs   of   selling,   packing,   transportation  and  collection.     Quantity   discounts   may   be   either   cumulative   or   non-­‐cumulative.   A   non-­‐ cumulative   discount   applies   to   an   individual   order,   which   means   that   it   is   determined  by

 the  quantity  bough  at  one  time.  A  retailer  may,  for  instance,  sell   golf   balls   at   1   dollar   each   or   three   for   2.50   dollars,   and   a   wholesaler   may   grant   a   quantity   discount   of   5   per   cent   on   any   order   exceeding   1000   dollars.   A   slightly   different   approach,   employed   mainly   by   manufacturers   and   wholesalers,   is   to   use   a   quantity   discount   schedule.   This   form   of   non-­‐cumulative   quantity   discount   is  based  on  the  principle:  the  larger  the  quantity  per  order,  the  higher  the  rate  of   discount.  The  aim  is  to  encourage  a  buyer  to  place  as  big  an  order  as  he  can

 to  get   the   highest   possible   rate.   The   quantity   discount   schedule   of   a   manufacturer   of   adhesives,  for  example,  might  specify  that  the  price  is  24  dollars  per  box  for  the   first  five  boxes,  23  per  box  if  the  customer  buys  between  six  and  ten  boxes,  22   per  box  on  purchases  of  between  eleven  and  twenty  boxes,  and  so  on.     A   cumulative   quantity   discount   is   based   on   the   total   volume   purchased   over   a   certain   period   of   time,   regardless   of   the   size   and   number   of   individual   orders.  This  type  of  discount  is  an  advantage  to  a  seller  because  it  ties  customers   more

  closely   to   him.   It   is   used   especially   for   perishable   products   and   durable   consumer   goods,   and   may   be   granted   either   as   a   fixed   percentage   on   annual   purchases  exceeding  a  states  limit  (e.g  one  per  cent  on  annual  purchases  of  over   10,000  dollars)  or  in  the  form  of  a  quantity  discount  schedule,  such  as:     29   Source: http://www.doksinet   Annual  purchases   Discount  in  %   10,001  –  20,000   20,001  –  30,000   30,001  –  40,000   40,001  –  50,000   50,001  –  60,000   1   2   3   4   5     It  should  be  clear  from  the  nature  of  the  cumulative  quantity  discount  that   it  is  paid

 after  the  event,  e.g  at  the  end  of  each  business  year  That  is  why  certain   types   of   cumulative   discounts   are   referred   to   as   rebates   (e.g   loyalty   rebate)   Another  possible  arrangement  is  to  permit  customers  to  deduct  the  discount  on   current   orders,   the   percentage   being   determined   by   last   year’s   volume   of   purchases.     The   above   explanation   is   based   on   the   sale   of   goods.   Obviously,   quantity   discounts   can   also   be   applied   to   the   provision   of   services,   e.g   in   the   car   rental   business,  in  tourism  and  in  passenger  transportation.       (58)  Trade  discount   Handelsrabatt,

 Wiederverkäuferrabatt,  Stufenrabatt     A   trade   discount   is   a   reduction   in   the   price   of   a   product   –   usually   a   percentage   of   the   list   price   –   granted   to   a   specific   class   of   buyers,   such   as   wholesalers   or   retailers,   to   compensate   them   for   the   performance   of   specific   marketing   functions.   The   size   of   a   particular   trade   discount   is   ideally   proportional  to  the  cost  incurred  in  reselling  the  item  concerned.  Retailers  have   the  highest  operating  costs  per  unit  of  sales,  and  therefore  enjoy  the  largest  trade   discounts  on  the  product’s  retail  price.  For  example,  a  manufacturer

 may  quote  a   retail   list   price   of   100   dollars,   with   trade   discounts   of   40   per   cent   and   15   per   cent.  The  ultimate  consumer  pays  the  retailer  involved  100  dollars,  the  retailer   pays   his   wholesaler   60   dollars,   who   in   turn   pays   the   manufacturer   51   (60   less   15%).   The   wholesaler   is   given   both   the   40   and   the   15   per   cent   discount   In   selling   to   the   retailer   he   passes   on   the   40   per   cent,   while   retaining   the   15   per   cent   to   cover   the   cost   of   the   wholesaling   services   he   provides.   It   should   be   noted   that  the  40  and  15  per  cent  do

 not  constitute  a  total  discount  of  55  per  cent  off   the   list   price.   Each   percentage   in   the   chain   of   discounts   is   computed   on   the   amount  remaining  after  the  preceding  one  has  been  deducted.     The   practice   of   quoting   retail   prices   and   allowing   trade   discounts   to   different   classes   of   buyers   enables   a   manufacturer   to   use   only   one   price   list   –   and,  what   is   more   important,   to   exercise   a   certain   degree   of   control   over   pricing   throughout  the  channel  of  distribution.               30   Source: http://www.doksinet (59)  Payment  in  advance   Vorauszahlung     Prepayment   is  

the   full   or   partial   payment   for   goods   or   services   prior   to   their  delivery  or  performance.  If  such  an  arrangement  is  agreed  in  a  contract  of   sale,  the  buyer  bears  the  risk  of  the  seller  defaulting  on  his  obligation  to  deliver   the  contract  goods.       (60)  Cash2   prompte/sofortige  Bezahlung     In  a  business  communication  context,  the  term  cash  is  frequently  applied  to   prompt   payment,   by   whatever   means.   Paying   cash,   therefore,   simply   indicates   that  settlement  is  effected  within  a  few  business  days  of  delivery  or  performance,   whether  by  banknotes  and  coins,  by  cheque,  or  by  transferring  the

 amount  owed   from  one  bank  account  to  another.       (61)  Cash  with  order,  CWO   Zahlung  bei  Auftragserteilung     This  refers  to  a  condition  of  payment  indicating  that  a  seller,  or  vendor,  is   prepared  to  supply  a  buyer  only  if  he  receives  payment  for  the  goods  in  question   together  with  the  latter’s  order.  This  means  that  he  is  paid  before  he  parts  with   his   goods,   and   thus   eliminates   any   credit   risk.   CWO   is,   therefore,   a   variant   of   payment  in  advance.       (62)  Cash/Collect  on  Delivery,  COD   Per  Nachnahme     In   connection   with   a   contract   of   sale,   COD  means   that  

payment   has   to   be   effected  on  delivery  of  the  contract  goods.  When  a  consignment  is  delivered  COD,   the  carrier  involved  (e.g  a  postal  service,  parcel  service  or  railway  company)  is   entrusted   with   the   collection   of   the   invoice   amount.   Once   the   buyer   has   paid   the   amount   due,   the   goods   are   released   to   him.   This   procedure   ensures   that   the   supplier   will   receive   payment   for   items   sold   to   a   customer   who   is   unknown   to   him.   The   only   risk   he   runs   when   he   uses   this   kind   of   arrangement   is   that   the   buyer  may  refuse  to  accept  the  goods  (risk  of

 non-­‐acceptance).       (63)  Sale  on  deferred  terms   Zielkauf     A  sale  on  deferred  terms,  also  known  as  a  credit  sale,  is  a  transaction  under   the  terms  of  which  a  supplier  sells  goods  to  a  customer  on  credit,  which  means   that   he   grants   a   credit   to   the   buyer   (supplier  credit).   The   supplier   specifies   the   period   of   time   allowed   for   payment.   For   example,   the   clause   our  terms  are  net  30     31   Source: http://www.doksinet indicates   that   the   invoice   involved   must   be   paid   within   30   days.   In   addition   to   extending   credit,   the   seller   may   grant   a   cash   discount   if  

the   invoice   is   settled   during  the  early  part  of  the  credit  period  (discount  period).       (64)  Open  account   Offene  Rechnung     Open   account   is   a   from   of   payment   under   which   a   customer   who   makes   regular   purchases   from   the   same   supplier   does   not   pay   for   each   of   them   separately;   rather   he   settles   the   related   invoices   monthly,   quarterly   or   at   any   other   predetermined   interval,   and   on   previously   agreed   terms.   The   amount   of   credit   extended   on   open   account   is   usually   limited,   the   maximum   sum   allowed   being  dependent  on  the  customer’s  creditworthiness.     Under  open

 account  terms,  the  supplier  involved  charges  all  invoices  sent   to   his   customer   to   the   latter’s   account   and,   at   the   end   of   the   period   agreed   upon,   provides  him  with  a  statement  account,  showing  the  amount  payable.  Payment  is   usually   made   by   credit   transfer,   by   cheque,   or   –   in   foreign   trade   –   by   banker’s   draft  or  by  SWIFT  transfer.     The  essential  feature  of  open  account  terms  is  that  the  buyer’s  obligation  to   pay  is  not  evidenced  by  a  negotiable  instrument,  such  as  a  bill  of  exchange  drawn   on  him  by  the  seller  or  a  promissory  note  issued  by  him  in

 favour  of  the  seller.   Since   there   is   no   evidence   of   debt,   serious   collection   problems   may   arise   if   the   buyer  defaults.  Therefore,  when  granting  open  account  terms,  the  supplier  must   have  absolute  trust  that  the  purchase  can,  and  will,  pay  at  the  agreed  time.  As  a   result,   such   terms   are   offered   only   to   customers   with   whom   the   seller   has   had   favourable   business   relations   for   a   long   time,   or   –   in   foreign   trade   –   to   the   exporting  company’s  branches  or  subsidiaries.       (65)  Down  payment   Anzahlung     The   term   down   payment   or   deposit   is   typically   used   in

  connection   with   instalment  sales,  where  it  refers  to  a  certain  percentage  of  the  purchase  price  of   goods   which   has   to   be   paid   on   delivery,   the   balance   being   payable   in   periodic   instalments.     In   an   international   trade   transaction,   down   payment   is   applied   to   that   portion  of  the  contract  price  which  the  buyer  is  required  to  pay  to  the  exporter   on  or  before  delivery  of  goods,  or  performance  of  the  services.  For  instance,  the   importer  may  have  to  pay  5%  of  the  price  when  the  contract  is  signed  and  10%   on  delivery.  The  remainder  may  be  subject  to  a  variety  of  credit

 terms             32   Source: http://www.doksinet (66)  Instalment   Rate     An  instalment  is  any  of  a  number  of  part  payments,  which  are  typically  of   equal   amount   and   due   at   regular   intervals.   The   term   is   used   especially   in   connection  with  the  purchase  of  consumer  goods  on  an  instalment  plan,  but  may   also   be   applied   to   part   payments   on   a   debt   (e.g   a   term   loan),   each   of   which   is   specified  as  to  amount  and  date  due,  interest  often  being  included.       (67)  Instalment  sale   Ratenkauf     Where   goods   are   bought   on   an   instalment   plan,   the   buyer   is   usually  

required   to   pay   a   certain   percentage   of   the   purchase   price   as   a   deposit   (or   down   payment),   while   the   balance   has   to   be   settled   by   means   of   a   number   of   part   payments  of  equal  amount  at  stipulated  intervals  (instalments).  Title  to  the  goods   purchased   under   such   an   arrangement   may   pass   either   on   payment   of   the   deposit   and   delivery   of   the   items   (credit   sale)   or   on   payment   of   the   last   instalment   (conditional  sale).  Hire   purchase   transactions,   although   legally   more   complicated,  are  similar  to  conditional  sales  in  that  title  is  not  transferred  until   the   final  

instalment   has   been   paid.   The   term   hire   purchase   is   often   indiscriminately   applied   to   credit   sales,   conditional   sales,   and   hire   purchase   transactions   proper,   and   in   everyday   usage   has   therefore   become   a   synonym   for   instalment  sale.       (68)  Creditworthiness/credit  standing   Kreditwürdigkeit,  Bonität     Creditworthiness   is   a   person’s,   company’s   or   country’s   ability   and   willingness  to  pay  his  or  its  debts  in  due  course,  i.e  when  they  become  payable   It  is  a  measure  of  financial  strength  and  influences  the  amount  of  credit,  which   suppliers   or   lenders   are   prepared   to   grant.   The  

assessment   of   a   debtor’s   creditworthiness  on  the  basis  of  a  formal  scale  is  known  as  credit  rating.       (69)  Bank  reference/banker’s  reference   Bankreferenz     By  bank  reference  we  mean  the  name  of  a  bank  from  which  a  supplier  can   get   information   about   his   customer’s   creditworthiness.   It   should   be   noted   that   banks   only   give   information   to   other   banks.   Therefore,   a   supplier   seeking   information  from  his  customer’s  bank  can  obtain  it  only  through  his  own  bank.     33   Source: http://www.doksinet Unit  7  –  Business  Transactions  II:  Orders  &  Contracts     (70)  Contract  of  sale  

Kaufvertrag     A  contract  of  sale  (sales  contract,  contract  of  sale  of  goods)  is  a  contractual   agreement   by   which   a   seller   (vendor)   transfers,   or   agrees   to   transfer,   property   (=right   in   ownership)   in   goods   to   a   buyer   (vendee)   for   a   consideration   in   cash   (price).   A   contract   of   sale   is   one   under   which   the   consideration   is   payable   in   money.  Consequently,  barter  transactions  (where  payment  is  made  in  kind)  are   not  deemed  to  be  contracts  of  sale,  in  spite  of  their  obvious  similarities.     As   is   the   case   with   many   other   contractual   agreements,   a   contract   of   sale   need

 not  be  in  written  form,  nor  need  it  be  embodied  in  a  separate  document.  It   may   be   implied   in   a   series   of   actions,   or   established   trough   an   exchange   of   messages.  In  business-­‐to-­‐business  contexts,  contracts  of  sale  are  often  made  by   an  exchange  of  letters  or  telephone  calls,  typically  starting  with  an  inquiry.  The   seller   is   asked   to   submit   an   offer   and   if   the   offer   is   firm,   any   order   based   on   it   results   in   a   contract.   By   contrast,   in   the   case   of   an   offer   without   engagement   a   confirmation  of  the  buyer’s  order  is  required.     Contracts  of  sale

 are  governed  by  national  law.  In  spite  of  broad  similarities   between   national   sales   laws,   there   are   also   considerable   differences.   For   example,   in   Germany   and   Austria   contracts   of   sale   cover   transactions   in   (a)   personal   property   (bewegliche   Güter),   (b)   accounts   receivable   (Forderungen   aufgrund   von   Warenlieferungen   und   Leistungen)   and   (c)   property   (Immobilien),   while  under  British  law  only  contracts  involving  the  first  category  are  deemed  to   be  contracts  of  sale.  The  UN  Convention  on  Contracts  for  the  International  Sale  of   Goods   tries   to   overcome   the   problem   of   these   dissimilarities,   but   has

  not   yet   been  acceded  to  by  all  important  trading  nations.     A   contract   for   the   international   sale   of   goods   in   written   form   is   likely   to   include  the  following  provisions:  parties;  goods  (description  and  quantity);  price   (including   currency);   trade   terms;   passing   of   property;   packing   and   marking;   terms  of  payment;  terms  of  delivery;  inspection  of  the  goods;  insurance;  shipping   documents;   contract   penalty   (e.g   for   late   delivery);   force   majeure   (eg   wars,   earthquakes);   jurisdiction;   arbitration   (arrangement   for   settling   disputes   without  going  through  a  court  of  law);  applicable  law;  ruling  language.  

    (71)  Firm  offer   Festes  (fixes,  bindendes)  Angebot     Every  offer  is  firm  unless  it  contains  a  clause  to  the  contrary.  Firm  means   that   the   offer   is   binging   on   the   offeror.   If   a   seller   makes   a   firm   offer,   he   undertakes  to  supply  the  goods  or  services  in  question  at  the  price(s)  and  on  the   terms  stated,  provided  it  is  accepted  within  reasonable  time,  or  within  the  time   limit  for  acceptance  stipulated  by  him.       34   Source: http://www.doksinet In  Britain,  a  firm  offer  can  be  withdrawn  at  any  time  before  the  buyer  mails   his   acceptance,   i.e   his   order,   even   if   a  

time   limit   for   acceptance   has   been   stipulated.  Once  the  acceptance  has  been  posted,  however,  the  seller  can  revoke   his  offer  only  with  the  buyer’s  consent.  By  contrast,  in  Austria  an  offeror  cannot   change   or   revoke   his   offer   after   it   has   been   received   by   the   offeree,   unless   the   latter  agrees.     It  is  important  to  note  that  only  a  firm  offer  is  an  offer  within  the  meaning   of   the   law   of   contract,   whereas   an   offer   without   engagement   is   merely   an   “invitation  to  treat”.  This  means  that  an  order  placed  against  a  firm  offer  result  in   a  contract  of  sale,  provided

 that  it  is  placed  in  time  and  constitutes  an  unqualified   acceptance  of  the  offer.       (72)  Offer  without  engagement   Freibleibendes  Angebot,  unverbindliches  Angebot     An   offer   without   engagement   (also   referred   to   as   an   offer   subject   to   confirmation  or   offer  without  obligation)   is   one   which   is   not   binding   on   the   party   submitting  it.  If  a  seller  does  not  want  to  be  bound,  he  makes  an  offer  subject  to   certain  conditions.  For  instance,  he  may  stipulate:   1. Prices  are  subject  to  change  without  notice   2. Subject  to  price  ruling  at  time  of  dispatch   3. Subject  to  prior  sale  /  Subject

 to  being  unsold  /  Subject  unsold  /   This   offer   is   made   subject   to   the   goods   being   unsold   when   the   order  is  received.   4. Goods  ordered  can  be  supplied  only  until  our  stocks  run  out  /  are   depleted  /  are  exhausted.   Frequently   suppliers,   when   submitting   an   offer,   only   is   the   phrase   this   offer   is   subject  to  confirmation  or  this  offer  is  without  engagement.     An  offer  without  engagement  is  not  an  offer  within  the  meaning  of  the  law   of   contract,   but   merely   an   “invitation   to   treat”.   Consequently,   an   order   placed   by   a   buyer   against   a   seller’s   offer   without  

engagement   does   not   result   in   a   contract.   From   a   legal   point   of   view,   this   order   is   an   offer,   which   may   be   accepted   or   rejected  by  the  seller.       (73)  Offer  (for  goods)   Auftrag,  (Waren-­‐)Bestellung     An   order   is   a   request   by   a   prospective   customer   to   a   business   firm   to   supply  specific  goods.  A  complete  order  should  cover  the  same  points  as  an  offer,   i.e  quantity,  quality,  colour,  packing,  and  price;  terms  of  payment  and  delivery;   mode  of  transport;  etc.     A   buyer   who   is   not   sure   whether   a   new   supplier   will   be   able   to   meet   his   requirements,

  or   whether   the   goods   in   question   are   suitable   for   his   market,   may   place   a   trial   order,   i.e   an   order   for   a   small   quantity   for   testing   purposes   This     35   Source: http://www.doksinet may  be  followed  by  a  larger  one  if  he  is  satisfied  with  the  items,  or  if  he  finds  that   there   is   a   market   for   them.   From   this   it   is   clear   that   a   trial   order   is   usually   an   initial  order,  i.e  the  first  order  placed  by  a  customer  with  a  particular  supplier  A   standing   order,   on   the   other   hand,   is   an   arrangement   between   a   buyer   and   a   seller   under   which   the

  latter   undertakes   to   deliver   certain   goods   in   specified   quantities,  at  predetermined  intervals,  until  further  notice.     It   should   be   noted   that   an   order   placed   against   a   firm   offer   results   in   a   contract,   provided   it   is   made   in   time   (i.e   within   the   time   limit   for   acceptance)   and   constitutes   an   unqualified   acceptance   of   the   offer.   By   contrast,   neither   an   order   in   response   to   an   offer   without   engagement,   not   one   on   the   buyer’s   own   initiative,  not  one  that  modifies  the  terms  of  the  offer  on  which  it  is  based,  gives   rise  to  a   contract   until   it   has  

been   confirmed   –   and  thus  accepted  –  by  the  seller.   In   contract   law,   such   an   order   is   an   offer   by   the   buyer   to   purchase   certain   goods   if  the  seller  can  supply  them  at  the  price(s)  and  on  the  terms  stated  therein.       (74)  Confirmation   Bestätigung     Confirmations   are   business   letters   sent   in   connection   with   outgoing   or   incoming   messages.   In   all   cases   where   a   seller   is   free   to   accept   or   refuse   an   incoming  order,  the  seller’s  confirmation  constitutes  his  formal  acceptance  of  the   order,  which  results  in  a  contract  between  the  two  parties.       In   contrast,

  acknowledgment   relates   only   to   the   former   variety.   The   term   acknowledgment   tends   to   be   restricted   to   situations   where   the   intention   is   merely   to   inform   the   sender   that   his   message   has   been   received.   This   distinction   also  applied  to  the  corresponding  verbs,  as  can  be  seen  in  the  following  sentence     from   a   business   letter:   “I   acknowledge   receipt   of   your   order   and   confirm   it   as   follows”.       (75)  Counter-­‐offer   Gegenangebot     A  counter-­‐offer  is  a  statement  by  an  offeree  to  the  effect  that  he  refuses  to   accept  the  offer  submitted  to  him,  but  that  he  is

 willing  to  enter  into  a  contract   on  his  own  terms.  In  connection  with  a  sale  of  goods,  it  may  either  be  submitted   either  by  the  buyer  or  by  the  seller.  If  the  buyer  is  interested  in  the  items  offered,   but  does  not  agree  with  that  price  and/or  terms  proposed  by  the  seller,  he  may   make  a  counter-­‐offer.     If  a  supplier  is  unable  to  fill  an  order  for  some  reason,  he  will  not  refuse  the   order   outright,   but   make   a   counter-­‐offer,   for   example   by   recommending   substitutes.   This   means   that   the   buyer   needs   to   be   persuaded   that   the   suggested   substitutes  are  at

 least  as  good  as  the  items  originally  ordered.         36   Source: http://www.doksinet (76)  Sample1   Muster,  Probe     In   a   commercial   context,   sample  refers   to   a   small   portion   or   one   unit   of   a   larger   quantity   of   goods.   Since   a   sample   is   meant   to   display   the   same   characteristics   as   the   bulk   from   which   it   is   taken   (or   drawn),   using   it   is   a   convenient   way   of   showing   prospective   customers   what   the   items   offered   are   like.  Samples  are  often  sent  to  enable  prospects  to  test  them  carefully  and  decide   whether   or   not   to   make   a   purchase.   They   may   also   be

  distributed   free   of   charge,   for  example  by  sales  representatives  or  as  a  promotion  in  retail  establishments.   A  contract  of  sale  explicitly  based  on  a  sample  is  called  a  sale  by  sample  or  a  sale   according  to  sample.     The  term  sample  may  be  used  for  raw  materials  (such  as  wool,  tobacco  or   cotton)   or   for   finished   goods   (e.g   toothbrushes,   combs)   Small   cuttings   or   textiles   intended   to   show   what   the   whole   piece   is   like   are   usually   known   as   patters.       (77)  Consignment1   Warensendung,  Posten     In  general,  the  term  consignment  is  applied  to  a  set  of  articles  dispatched

 by   a   supplier   at   one   time.   In   this   sense,   consignment   is   used   as   a   synonym   for   shipment.       (78)  Consignor1   (Waren-­‐)Absender     In  general,  the  term  consignor  is  applied  to  a  business  firm  sending  goods   to  another  firm,  a  private  individual,  a  government  agency,  etc.       (79)  Consignee1   (Waren-­‐)Empfänger     In   general,   a   consignee   is   the   recipient   of   a   consignment   of   goods.   Consignees  may  be  private  individuals,  business  firms,  government  agencies,  etc.       (80)  Forwarding  agent   Spediteur     A  forwarding  agent,  or  freight  forwarder,  acts  as  an  intermediary  between   a

 party  wishing  to  send  or  collect  goods  and  another  who  is  to  transport  them,   i.e   between   a   consignor   or   consignee   and   a   carrier   The   forwarding   agent   employs  the  services  of  a  carrier,  with  whom  he  enters  into  a  contract  of  carriage   for  his  client’s  account.  The  forwarding  agent  collects  the  items  to  be  transported     37   Source: http://www.doksinet from   the   consignor,   delivers   them   to   the   carrier,   and   makes   arrangements   for   transshipment,   if   necessary.   At   the   consignor’s   request,   he   issues   a   document   known  as  a  forwarding  agent’s  (certificate  of)  receipt.     A   forwarding   agent  

can   obtain   lower   freight   rates   by   combining   several   small   consignments   into   a   single,   larger   one.   Such   a   grouped   consignment   (US:   consolidated  shipment)   is   addressed   to   a   correspondent   or   branch   office   at   the   place   of   destination,   which   splits   it   up   again   and   delivers   the   individual   consignments   to   the   various   consignees.   It   is   therefore   often   cheaper,   and   certainly   much   simpler,   for   suppliers   to   use   the   services   of   a   forwarding   agent   than  to  deal  directly  with  the  carrier.  The  services  of  such  an  intermediary  are  of   great  value  to  those  engaged  in  exporting,

 particularly  small  firms.     A   forwarding   agent   may   be   in   the   position   to   obtain   relevant   shipping   documents,  take  out  marine  insurance,  and  handle  customs  formalities  as  well  as   documentary   and   clean   collections.   Many   also   have   special   facilities   for   export   packing  and  warehousing,  and  some  also  provide  containers  services.       (81)  Carrier   Frachtführer,  Verfrachter     A   carrier   is   an   individual   or   an   organisation   whose   business   it   is   to   transport   goods.   He   or   it   enters   into   a   contract   of   carriage   with   a   shipper,   undertaking  to  carry  the  goods  specified  in  the  contract

 from  the  place  named  to   the  agreed  place  of  destination.     On  the  basis  of  various  modes  of  transport,  carriers  may  be  classified  into   land   carriers,   i.e   rail   carriers   (railway   companies)   and   road   carriers   (road   hauliers,   US:   trucking   firms),   air   carriers   (airline   operators),   sea   carriers   (shipping  companies)  and  inland  waterway  carriers.       (82)  Acceptance  of  goods   Annahme  (von  Waren)     From   a   legal   point   of   view,   the   buyer   is   deemed   to   have   accepted   the   contract  goods:   1. when   he   intimates   to   the   seller,   after   inspection,   that   he   has   accepted  them;   2. when   they  

have   been   delivered   to   him,   and   he   acts   as   if   he   were   the   owner,  e.g  if  he  resells  them  or  pledges  them  as  security;   3. when,   after   expiry   of   a   reasonable   time,   he   retains   them   without   intimating  to  the  seller  that  he  has  rejected  them.     There  is  a  distinction  between  an  acceptance  of  goods  and  taking  delivery  of   goods   (Waren   übernehmen/abnehmen).   In   the   latter   case,   the   buyer   merely   takes   over   the   items   concerned   from   the   seller,   carrier,   etc.,   without   indicating   whether  he  wants  to  accept  or  reject  them.     38   Source: http://www.doksinet (83)  Rejection  of  goods

  Annahmeverweigerung  (von  Waren)     Rejection  means  the  buyer’s  refusal  or  neglect  to  accept  the  goods  delivered   under   the   contract.   He   is   entitled   to   reject   them,   thus   repudiating   the   contract,   only  if  the  seller  has  failed  to  meet  important  contractual  obligations.  If  the  buyer   wishes   to   reject   the   goods,   he   has   to   intimate   to   the   seller   that   he   refuses   to   accept  them.  He  must  ensure  that  this  information  reaches  the  seller,  otherwise   it  is  ineffective.     Of  course,  it  is  also  possible  for  the  buyer  to  reject  the  goods  even  if  they   have   been   tendered   in   conformity  

with   the   contract   (wrongful   rejection).   In   Britain,  a  wrongful  rejection  constitutes  a  breach  of  an  essential  condition  –  the   seller   has   the   right   to   sue   for   damages.   Under   Austrian   law,   in   transactions   where  the  buyer  is  a  final  customer,  a  (wrongful)  rejection  is  deemed  to  be,  not  a   breach   of   contract,   but   only   a   minor   infringement   (called   Obliegenheitsverletzung);   even   so,   it   does   not   deprive   the   seller   of   his   claim   for   the  purchase  price  of  the  goods.       (84)  Breach  of  contract   (Kauf-­‐)Vetragsverletzung,  (Kauf-­‐)Vertragsbruch     Breach   of   contract   means   the   unexcused

  non-­‐performance   of   a   contract.   Such  an  infringement  occurs  when  one  party  to  the  contract:   1. fails  to  perform,  wholly  or  in  part,  or   2. makes  performance  impossible,  for  either  party,  or   3. gives   notice   of   intention   not   to   fulfill   the   contract   at   the   agreed   time   of  performance.       (85)  Wrong  goods   Falsche  Ware,  Aliudlieferung,  Anderslieferung     Wrong  goods  are  goods  delivered  under  a  contract  of  sale  that  are  different   in   nature   (this   is   the   distinguishing   factor   from   defective   goods)   from   the   ones   specified  in  the  contract.  Delivery  of  wrong  goods  entails  the  same  consequences  

as   non-­‐delivery   or   delay   in   delivery,   viz.   damages,   specific   performance,   or   rescission  of  the  contract.       (86)  Complaint   Mängelanzeige,  Mängelrüge,  Reklamation     In   the   context   of   a   contract   of   sale,   a   complaint   is   an   expression   of   discontent   and   may   be   made   by   the   buyer   to   the   seller   if   the   goods   delivered   are   defective,  if  the  latter  has  delivered  wrong  quantities  or  wrong  goods,  if  there  is  a   delay,  etc.  It  must  be  communicated  to  the  seller,  usually  in  the  form  of  a  letter  of   complaint.   Unless   he   is   informed   of   the   exact   nature   of   the  

defect   and   all   other     39   Source: http://www.doksinet relevant   details,   the   seller   cannot   take   appropriate   measures   (e.g   repair   the   goods,  send  a  replacement,  or  grant  a  price  reduction)  to  settle  the  complaint.       (87)  Damages   Schadenersatz,  Vertragsstrafe     Damages   are   remedies   for   breach   of   contract.   They   are   money   compensation  for  a  loss  suffered.  The  purpose  of  awarding  damages  is  to  put  the   injured  party,  as  far  as  money  can  do  it,  in  the  position  in  which  he  would  have   been,  had  the  contract  not  been  broken.     Sometimes   the   parties   themselves,   when   entering   into   a  

contract,   fix   the   amount   of   damages.   Such   amounts,   which   are   in   effect   contract   penalties,   are   called   liquidated   damages   (also:   compensatory   damages)   if   they   represent   a   genuine   estimate   of   the   loss   to   be   expected,   or   punitive   damages   if   they   are   higher  than  the  expected  loss.       40   Source: http://www.doksinet Unit  8  –  Marketing  I:  Introduction  &  Product  Policy     (88)  Marketing   Marketing,  Absatzpolitik     Originally,   marketing   simply   meant   “selling   goods   in   a   market”.   Modern   marketing   may   be   described   as   a   complex   system   of   business   activities   designed   to  plan,

 price,  promote  and  distribute  a  firm’s  products  with  a  view  to  satisfying   consumer  wants  and  needs  and  to  achieving  certain  organisational  goals.     Before   such   a   programme   can   be   started,   it   is   necessary   for   the   firm   to   analyse   the   potential   market   to   find   out   what   its   prospective   customers’   wants   and   needs   really   are   (market   analysis).   Alternatively,   it   may   adopt   a   more   aggressive   approach   and   decide   to   create   new   wants   and   desires.   Another   important  preliminary  step  is  for  the  business  to  segment  the  market  in  order  to   be   able   to   identify   a   suitable   target

  group,   or   several   such   groups,   which   it   can   serve  efficiently  (market  segmentation  and  targeting).     For   mnemotechnical   reasons,   the   main   elements   of   a   marketing   programme,  or  marketing  mix,  are  referred  to  as  the  four  Ps:  Product,  Price,  Place   and   Promotion.  Modern   marketing   requires   the   whole   business   organisation   to   be   subordinated   to   the   marketing   philosophy.   Research   and   development,   production,   and   finance   are   supposed   to   take   their   cues   from   marketing.   This   approach   is   reflected   in   the   increasing   importance   of   marketing   department   and   marketing  managers  within  business  firms.    

In   modern   marketing   the   emphasis   is   on   the   satisfaction   of   consumer   wants  and  needs  (retail  sector)  rather  than  on  products,  which  are  regarded  as   tools   for   achieving   that   end.   From   a   modern   marketing   point   of   view,   a   company   selling   drill   bits   is   actually   in   the   business   of   producing   holes,   for   which   other   products   might   be   suitable.   The   realisation   that   this   is   so   may   have   important   consequences  for  its  product  policy.  The  concept  of  modern  marketing  has  also   been   applied   to   industrial   goods   (industrial  goods  marketing)  and,   increasingly,   to  services  (service

 marketing).     The   marketing   concept   fails   to   allow   for   long-­‐run   consumer   and   public   welfare,   leads   to   a   misallocation   of   resources,   and   tends   to   neglect   the   social   costs   involved   in   concentrating   exclusively   on   short-­‐term   consumer   wants.   A   marketing   concept   that   tries   to   avoid   these   pitfalls   is   called   societal,  or   socially   responsible,  marketing  and,  by  implication,  acknowledges  that  marketing  should   also  have  an  “educational  function”.     Another   new   development   is   the   application   of   the   marketing   concept   to   non-­‐business   organisations   such   as   governments,   political   parties,  

museums,   schools,   universities,   and   charities   (non-­‐profit   marketing).   Although   the   relationships   of   such   organisations   with   their   respective   target   groups   may   resemble   the   marketing   of   ordinary   goods,   some   scholars   think   that   more   is   lost   by  this  broadening  of  the  marketing  concept,  and  that  it  represents  an  unjustified   encroachment  on  fields  that  are  essentially  not  amenable  to  business  analysis.     41   Source: http://www.doksinet (89)  Market  segmentation   Marktsegmentierung     Market  segmentation   is  a  marketing  strategy  which  divides  a  firm’s  market   into   a   number   of   sub-­‐markets,   or   target   groups,   each

  having   different   characteristics,   e.g   on   the   basis   of   geographic   (territorial   units),   demographic   (age,   family   size,   sex,   income,   education,   occupation,   religion,   race,   nationality,   social   class),   psychographic   (lifestyle   and/or   personality)   variables.   Demographic   variables   are   the   most   popular   basis   for   identifying   customer   groups.     The   general   idea   of   market   segmentation   is   to   provide   an   alternative   to   undifferentiated   mass   marketing,   which   tries   to   reach   as   many   customers   as   possible   with   one   product   range   and   one   marketing   programme.   Microsegmentation,   a   more   recent   development,   carries   the

  idea   even   further.   Modern   data   processing   methods   have   made   it   possible   for   marketers   to   categorise   customers   into   even   smaller   groups   and   target   them   with   great   precision  (precision  marketing).  This  is  particularly  useful  in  what  has  come  to  be   called  direct  marketing,  which  means,  for  example,  using  direct  mail  or  telephone   calls   to   contact   potential   buyers.   In   many   cases,   both   traditional   segmentation   and   microsegmentation   will   allow   companies   to   make   better   use   of   their   marketing   resources,   and   may   well   be   necessary   to   survive   in   an   increasingly   competitive  marketing  environment.

      (90)  Product  Policy   Produktpolitik     A  company’s  product  policy  is  the  sum  total  of  all  decisions  relating  to  its   offering.   The   first   task   is   to   determine   what   product(s)   to   buy   or   produce   and   to   sell.   Then   it   is   necessary   to   decide   whether   to   expand   or   simplify   the   existing   product   range   (diversification   versus   simplification).   Product   innovation   is   an   important   area   in   this   context.   Other   decisions   are   concerned   with   the   quality   of   the  products,  with  branding,  packaging,  etc.  The  firm  may  choose  to  go  upmarket   (trading   up)   or   downmarket   (trading   down).   It

  may   use   one   brand   for   each   important  line;  or,  alternatively,  it  may  drop  brands  altogether  and  concentrate   on  generic  items.       (91)  Product  mix   Produktmix,   Produktionsprogramm   (bei   Herstellern),   Leistungsprogramm   (bei   Anbietern  von  Dienstleistungen),  Verkaufsprogramm  (bei  Händlern),  Sortiment     A   firm’s   product   mix   comprises   the   full   range   of   products   offered.   Its   structure   is   determined   by   the   number   of   different   lines   carried   (breadth,   or   width,   of   the   range)   and   by   the   number   of   different   items,   models,   etc.   in   each   line  (depth  of  range).  The  term  product  mix  and  product

 range  have  basically  the   same   meaning.   The   latter,   however,   is   purely   descriptive,   while   the   former   emphasises  strategic  aspects.  Decisions  in  this  area  form  part  of  the  wider  field     42   Source: http://www.doksinet of  product  policy,  and  are  therefore  concerned  with  diversification,  product  line   simplification,  product  innovation,  etc.       (92)  Product  line   Produktlinie  (bei  Herstellern),  Warengruppe  (bei  Händlern)     A   product   line   is   a   group,   or   class,   of   products   which   possess   similar   physical  characteristics  and  are  intended  for  broadly  similar  uses.  The  depth  of  a   line   is   determined   by   the  

number   of   different   items,   colours,   models,   etc.   it   comprises.   A   firm   may   decide   to   carry   only   one   line,   which   will   then   be   identical   with   its   product   range/mix,   or   it   may   have   several   lines.   A   department   store,   for   instance,  generally  stocks  a  large  number  of  lines  (roughly  corresponding  to  the   number  of  departments),  while  stockists  often  carry  only  one  (e.g  photographic   supplies  or  electrical  appliances).       (93)  Product  life  cycle1   Produktlebenszyklus     This  expression  denotes  the  typical  pattern  of  the  sales  volume  and  profits   generated   by   a   particular   product   over   its  

span   of   life.   The   cycle   is   generally   divided   into   six   stages:   introduction   (launch),   growth,   maturity,   saturation,   decline   and   abandonment.   There   are,   however,   a   number   of   exceptions   A   firm   may,   for   example,   decide   to   revive   a   declining   brand   by   relaunching   it;   or,   in   special   cases,   the   product   involved   is   never   really   abandoned,   but   its   sales   and/or  profits  are  allowed  to  stagnate  at  a  low  level  (petrification).     The  product  of  life  cycle  is  a  useful  management  tool.  It  can  be  employed  by   a   company   to   forecast,   plan   and   co-­‐ordinate   the   sales,   profits,  and

  contribution   margin  of  an  individual  product,  a  product  line,  or  the  whole  product  mix,  thus   helping  it  to  avoid  mistakes  such  as  allowing  all  or  most  of  its  products  to  reach   the  decline  stage  at  the  same  time.       (94)  Diversification   Diversifizierung,  Diversifikation     According   to   Kotler,   the   doyen   of   marketing   scholars,   diversification   is   a   product   policy   that   offers   “new   products   for   new   markets”.   A   firm   may   decide   to   expand   its   product   mix   by   adding   a   new   line,   or   new   lines,   which   will   presumably   be   sold   to   different   target   groups.   The   idea   of  

diversifying   out   of   a   given   product   line   into   new   fields   is   to   create   additional   sources   of   income   independent   of   existing   ones,   thereby   spreading   the   risk   inherent   in   relying   on   a   single   line.   However,   diversification   carries   risks   of   its   own   It   may   create   management   problems   and   lead   to   a   loss   of   control   over   costs.   This   is   particularly  true  in  cases  where  companies  have  diversified  on  a  larger  scale  by   acquiring  other  businesses  and  creating  conglomerate  groups,  or  conglomerates.   The   trend   towards   diversification   in   the   1980s   has   since   been   reversed   to   give  

  43   Source: http://www.doksinet rise  to  a  new  management  philosophy  epitomised  in  the  slogans  back  to  basics  or   focusing  on  one’s  core  business  (e.g  Volvo)     The   term   diversification  is   not   only   restricted   to   product   portfolio   contexts,   but   can   also   be   applied   in   the   field   of   financial   investment.   Here   it   describes   a   policy   of   acquiring   a   wide   range   of   investment   media,   e.g   shares   of   different   companies,  bonds  or  property,  instead  of  “putting  all  your  eggs  in  one  basket”.       (95)  Branding   Markenpolitik     Branding  is  an  element  of  a  firm’s  product  policy.  It  is  

chiefly   designed   to   help   potential   and   existing   customers   to   identify   the   products   of   a   particular   seller   and   differentiate   them   from   those   of   his   competitors.   This   is   extremely   important  in  today’s  marketing  environment,  characterised  by  keen  competition,   self-­‐service  retailing,  and  heavy  promotional  activities.     Putting  a  distinctive  sign,  word  or  symbol  creates  an  opportunity  that  must   be   exploited   by   skillful   advertising,   pricing   and   standardisation,   as   well   as   by   emphasising   quality   and   reliability,   to   create   a   positive   brand   image   and   brand   loyalty  among  consumers.  Ultimately,  a

 particular  brand  must  become  a  kind  of   unwritten  guarantee  for  the  product  features  a  customer  is  looking  for.     There  has  recently  been  an  increasing  use  of  retailer’s  brand  (also  known   as  own  labels,  private  bonds,  store  brands  or  dealer’s  brands).  These  are  branded   goods   that   are   sold   exclusively   by   a   particular   retailer,   although   they   are   often   produced   by   manufacturers   of   national   or   global   brands.   Private   brands   have   enabled   the   retailers   concerned   to   reap   some   of   the   benefits   of   branding   originally   accruing   to   the   producers.   In   spite   of   the   fact   that   such  

labels   are   typically  sold  at  lower  prices  than  comparable  manufacturers’  brands,  they  carry   higher  margins  for  the  retailers.  This  is  only  possible  because  of  the  lower  prices   paid  to  the  manufacturers.     Another  strategy  for  retailers  is  to  drop  brands  altogether  and  concentrate   on  what  are  generic  (or  no-­‐name)  products.  Under  this  strategy,  a  packet  of  sugar,   for   instance,   would   carry   neither   the   producer’s   nor   the   retailer’s   label   but   would  be  sold  in  a  brown  bag  under  its  generic  name,  viz.  sugar,  obviously  at  a   lower  price.     Another   interesting   aspect   of   branding   is   that

  a   firm   may   decide   to   have   only  one  brand  for  all  its  products  or  a  separate  one  for  each  line  or  product  it   sells.   These   decisions   are   influenced   by   various   considerations   For   instance,   a   company   marketing   baby   food   and   dog   food   would   be   well   advised   to   use   a   different   label   for   each   line.   On   the   other   hand,   a   strong   brand   name   may   be   leveraged   (i.e   exploited)   by   extending   it   to   other,   maybe   completely   different,   products.   The   Virgin   label,   for   instance,   created   by   the   youthful   and   dynamic   British   entrepreneur   Richard   Branson,   can   be   found  

on   everything   from   music   stores  to  jumbo  jets.       44   Source: http://www.doksinet Unit  9  –  Marketing  II:  Price  &  Promotion      (96)  Price  policy   Preis-­‐  und  Konditionenpolitik     Pricing  products  is  an  extremely  complex  and,  at  the  same  time,  extremely   important  marketing  activity:  complex,  because  so  many  variables  are  involved;   important,  because  –  in  the  long  run  –  the  success  and  even  the  survival  of  a  firm   will  depend  on  the  prices  it  charges  for  its  goods  and  services.     First,  it  should  be  quite  clear  what  the  price  of  a  product  really  relates  to.  It   may   refer  

either   to   the   naked   physical   item   to   be   picked   up   and   paid   for   immediately   by   its   buyer   (cash-­‐and-­‐carry   price)   or   to   the   product   plus   any   number   of   additional   services   (e.g   delivery,   modification,   installation,   credit,   warranty).   Moreover,   since   it   is   the   amount   actually   paid   by   the   customer   that   counts,  discounts  and  similar  allowances  also  form  part  of  price  policy.     A   company’s   price   policy   is   influenced   by   a   large   number   of   external   and   internal   factors.   It   will,   for   instance,   be   determined   by   the   type   of   market   the   business  operates  in.  Under

 pure  (or  perfect)  competition,  with  many  sellers  and   buyers,   the   former   are   simply   price-­‐takers,   i.e   they   have   to   sell   at   market   prices   A   monopolist,   on   the   other   hand,   has   some   discretionary   power   over   prices,   since   he   has   no   competitors.   Oligopolistic   markets,   dominated   by   a   few   large   firms,   are   characterised   by   the   mutually   recognised   interdependence   of   the   rival   sellers’   price   policies.   Moreover,   price   policy   cannot   ignore   the   relationship   between  price  and  demand  for  a  particular  product.  There  are  some  cases  where   a   small   change   in   price   will   lead   to   a  

large   change   in   the   quantity   demanded,   while  in  others  demand  may  be  much  less  sensitive  to  price  changes.  Customer   perception   of   the   product   to   be   priced   and   its   tangible   and   intangible   benefits,   economic   factors,   government   economic   policy,   and   the   price   policies   of   suppliers   are   other   important   external   influences   on   pricing   decisions.   Both   suppliers   and   the   government   may   restrict   a   seller’s   room   for   manoeuvre.   When   resale  price  maintenance  was  still  permitted  in  the  UK,  it  was  quite  common  for   suppliers   to   blacklist   resellers   that   did   not   adhere   to   the   prices   they

  set.   Governments   may   use   their   powers   to   control   prices   in   various   ways,   e.g   by   freezing  them  for  a  certain  period  of  time.     Perhaps   the   most   important   internal   factors   are   the   company’s   objectives   and   costs.   Before   setting   a   price,   it   must   decide   what   it   wants   to   achieve   with   its   product   and   position   this   accordingly.   For   instance,   a   watch   positioned   and   advertised   as   a   prestige   gift   will   command   a   higher   price   (premium  price)   than   one   cast   as   good   value   for   money.   Broader   internal   goals   relevant   for   pricing   decisions  are  survival,  current  profit

 maximisation,  market-­‐share  leadership,  and   product-­‐quality   leadership.   In   the   case   of   new   and   innovative   products,   for   instance,  a  business  firm  may  adopt  either  skim-­‐the-­‐cream  pricing  (also  known   as   market-­‐skimming   policy)   or   penetration   pricing.   The   skimming   strategy   involves  charging  a  high  initial  price  to  appeal  to  the  high-­‐income  segment  of  a   particular   market.   The   idea   is   usually   to   lower   the   price   later   on   when   competitors   have   moved   in,   or   when   it   is   desired   to   tap   the   lower   end   of   the     45   Source: http://www.doksinet market.   Polaroid   is   a   prime  

practitioner   of   market-­‐skimming   pricing   However,   in   order   to   achieve   a   large   market   share   right   from   the   start,   a   company   will   use   penetration   (or   market-­‐penetration)   pricing,   i.e   it   will   set   a   low   initial   price   in   order   to   reach   the   mass   market   immediately   and   achieve   maximum   market   penetration.  This  pricing  strategy  is  pursued,  for  example,  by  Texas  Instruments   TI   will   build   a   large   plant,   set   its   price   as   low   as   possible,   win   a   large   market   share,   experience   falling   costs   –   and   then   cut   its   price   still   further.   Costs   have   an   important  influence

 on  price,  since  no  firm  can  afford  to  sell  below  cost,  at  least   not  in  the  long  run.  A  business  would  go  bankrupt  if  it  did     There   are,   however,   further   important   pricing   policies   such   as   psychological,  promotional,  discriminatory  and  product-­‐mix  pricing.  In  selecting   the  final  price  for  a  product,  enterprises  often  consider  among  other  things,  the   psychology  of  prices.  Many  consumers  perceive  price  as  an  indicator  of  quality   Image   pricing   is   especially   effective   with   ego-­‐sensitive   goods   such   as   perfumes   and  expensive  cars.  Moreover,  many  sellers  believe  that  prices  should  end  in  an

  odd  number.  Thus,  a  TV  set  is,  for  instance,  priced  at  299  instead  of  300     Firms   employ   several   pricing   techniques   to   stimulate,   or   promote,   sales.   The  best-­‐known  promotional  pricing  tools  are  loss-­‐leader  pricing,  cash  rebates,   low-­‐interest   financing,   and   longer   payment   terms,   as   well   as   warranties   and   service   contracts.   Discriminatory   pricing   occurs   when   a   company   sells   a   product   at   two   or   more   prices   that   do   not   reflect   a   proportional   difference   in   costs.   It   takes  several  forms,  e.g  customer-­‐segment  pricing  (different  groups  are  charged   differently),   location   pricing  

and   time   pricing   (prices   varied   by   season).   If   the   item  to  be  priced  is  part  of  a  product  mix,  the  business  concerned  may  search  for   a  set  of  prices  that  maximises  profit  on  the  mix  as  a  whole.  A  typical  variant  of   product-­‐mix   pricing   is   captive-­‐product   pricing.   Some   goods   require   the   use   of   ancillary  (or  captive)  products,  examples  of  these  being  razor  blades  and  camera   film.  Manufacturers  of  the  main  products  (razors  and  cameras)  often  price  them   low  and  set  high  mark-­‐ups  on  the  captive  products,  or  supplies.       (97)  Loss  leader   Lockvogelangebot     Loss  leaders,

 or  leader  items,  are  articles  offered  by  retailers  at  lower  than   regular  prices  (e.g  at,  or  even  below,  cost)  to  attract  customers  The  idea  is  that   they   will   come   into   the   shop   in   question   to   buy   the   advertised   loss   leader(s)   and   will   also   purchase   other,   regularly   priced   items.   Leader   pricing,   a   variant   of   promotional  pricing,  is  prohibited  in  a  number  of  countries.       (98)  Premium5   Spitzen-­‐   (z.B   Spitzenqualität),   Qualitäts-­‐   (zB   Qualitätsmarke),   Prestige-­‐   (zB   Prestigepreis)     Another   marketing   application   of   the   form   premium   is   in   compound   words   like   premium

 price,  premium  quality  or   premium  brand.  In   all   these   examples   it   is     46   Source: http://www.doksinet used   to   indicate   that   the   price   (and,   by   implication,   the   quality)   of   the   product   involved  is  above  the  usual  average,  and  that  the  article  is  therefore  clothed  in  an   aura   of   prestige.   Especially   if   their   quality   is   in   fact   not   significantly   higher,   premium   brands   have   to   be   supported   by   heavy   advertising   and   other   promotional  activities  to  create  and  sustain  a  prestige  image.       (99)  Promotion3   Kommunikationspolitik     In   marketing,   the   term   refers   to   one   of   the  

subsystems   of   a   firm’s   total   marketing   effort.   In   this   context,   promotion   is   an   exercise   in   persuasive   communication,  the  idea  being  to  inform,  persuade  and  influence  consumers  in   order   to   increase   sales   without   resorting   to   price   competition.   Promotion   includes   advertising,   public   relations,   personal   selling,   sales   promotion,   and   direct  marketing.       (100)  Promotional  mix   Kommunikations-­‐Mix     The   term   promotional   mix   or   marketing   communications   refers   to   the   combination  of  promotional  tools,  viz.  advertising,  etc,  used  by  a  firm  to  inform,   persuade   and   influence   certain   target   groups.   The

  structure   of   its   promotional   mix  is  determined  among  other  things,  by  the  size  of  the  promotional  budget,  the   nature   of   the   market   targeted   and   the   product(s)   to   be   sold,   legal   restrictions,   and  technological  progress.       (101)  Advertising   Werbung     Advertising   is   undoubtedly   the   most   important   and   best-­‐known   promotional   tool.   The   main   purpose   is   to   persuade   the   members   of   a   target   group   with   a   view   to   modifying   their   behaviour   in   some   way   desirable   for   the   advertiser.   Advertising   involves   the   dissemination   of   messages   over   the   mass   media   and   is   paid   for  

directly   by   an   identified   sponsor.   Product   advertising   is   geared   to   the   goods   and   services,   while   the   institutional   variety   is   intended   to   create   a   favourable   attitude   towards   the   advertising   organisation   and   to   build   goodwill.   Advertising   may,   however,   also   be   a   social   issue,   as   the   advertisers   seem  to  put  too  much  emphasis  on  persuasion  and  attempt  to  influence  people  in   ways  that  are  not  really  beneficial  for  them.       (102)  Advertising  medium   Werbeträger     Advertising   media   are   all   those   means   used   to   communicate   advertisements   to   a   chosen   audience.   There   is   a  

distinction   between   the     47   Source: http://www.doksinet major/mass   media   (e.g   radio,   TV,   outdoor   media   such   as   hoardings)   and   the   lesser  media  (e.g  direct  mail,  fairs)     Advertisers   need   to   select   the   advertising   medium,   a   vehicle   (e.g   specific   radio  station  when  using  radio  as  the  medium)  and  an  adverting  schedule.  The   aim   is   to   reach   as   many   members   of   the   target   group   as   possible   (optimum   coverage)   and,   as   few   outside   the   target   audience   as   possible   (minimum  loss  of   circulation).       (103)  Advertisement   Werbemittel,  Inserat,  Annonce     An   advertisement,   or   ad,   is   a

  message   or   announcement   presented   in   a   medium   at   the   expense   of   an   identified   organisation   or   person   to   persuade   a   particular  target  group  to  accept  an  idea,  etc.  Advertisements  may  be  composed   of   pictures,   drawings,   and   text   (often   called   advertising   copy)   in   the   form   of   descriptions,  slogans,  etc.,  but  may  also  include  musical  elements  such  as  songs,   signature  tunes  or  jingles.       (104)  Advertising  agency   Werbeagentur     Advertising  agencies  are  independent  commercial  service  organisations  or   business   firms,   which   not   only   provide   advertising   services,   but   also   other   marketing   services,

  e.g   sales   promotion,   direct   marketing,   test   campaigns,   preparation  of  sales  manuals,  and  market  research.  A  typical  advertising  agency   will   have   a   research   department,   a   creative   department,   a   media   selection   department,   and   an   accountant   management   department   (responsible   for   individual  accounts,  e.g  the  brands  or  products  for  which  the  agency  carries  out   advertising,   and   for   maintaining   close   contact   with   the   clients).   An   agency   executive   with   overall   responsibility   for   an   account   is   called   an   account   executive.  Most  agencies  have  a  separate  internal  service  department  as  well,  to   deal  with

 office  management,  finance,  billing,  accounting,  etc.       (105)  Public  relations   PR,  Öffentlichkeitsarbeit     The   expression   public   relations   denotes   the   deliberate   effort   to   establish   and   maintain   mutual   confidence   between   an   organisation   and   its   publics   (general   public,   company’s   employees,   customers,   shareholders,   etc.)   Public   relations,   firstly,   involves   ascertaining   and   evaluating   public   opinion,   i.e   trying   to  find  out  what  the  public  think  and  feel  about  the  enterprise  and  its  products;   secondly,  advising  the  firm’s  managers  on  how  to  deal  with  public  opinion  as  it   exists;  and  finally,  trying  to

 influence  it  with  the  help  of  various  communication   techniques.       48   Source: http://www.doksinet Public   relations   departments,   which   are   usually   corporate   staff   units   reporting  to  top-­‐level  management,  or  outside  public  relations  consultant  carry   out   a   great   variety   of   activities.   For   instance,   they   supply   the   media   with   interesting   information   about   the   business   firms   concerned,   arrange   press   conferences,   sponsor   cultural   events,   handle   major   customer   complaints,   and   organize  lobbying  efforts  –  all  with  a  view  to  creating  goodwill  and  projecting  a   positive  corporate  image.       (106)  Personal

 selling   Persönlicher  Verkauf     Personal   selling   is   the   most   important   promotional   activity.   This   is   reflected  in  the  fact  that  in  the  early  1990s  the  “personal  selling  industry”  in  the   US,   for   instance,   employed   as   many   as   13   million   people,   the   corresponding   figure   for   advertising   being   a   mere   500,000.   However,   the   weighting   of   personal   selling   in   the   promotional   mix   varies   from   industry   to   industry,   and   even   from   company   to   company.   In   general,   products   which   have   a   high   unit   value   and   require   demonstration,   e.g   computers   and   other   high-­‐tech   equipment,   are  

sold   by  this  method.     Personal  selling  may  be  carried  out  either  behind  the  counter  (e.g  in  retail   outlets)   or   in   the   field   by   people   referred   to   as   sales  representatives,  sales  reps,   sales   engineers,   or  (collectively)  as  the  sales   force.  Managing  –  that  is,  recruiting,   training,   scheduling   and   compensating   –   a   company’s   sales   force   is   a   complex   and   essential   task,   usually   entrusted   to   one   of   its   executives,   viz.   the   sales   manager.     Personal  selling  has  great  advantages  over  all  other  promotional  activities.   Since  it  involves  face-­‐to-­‐face  contact  with  prospective  customers,

 it  permits  the   salesperson   involved   to   use   customer   feedback   and   modify   his   presentation   in   mid-­‐course.  Moreover,  it  is  a  form  of  promotion  that  tends  to  lead  directly  to  a   sale.   In   many   cases   the   salesperson   not   only   arouses   interest   but   actually   sells   the  product  in  question.       (107)  Sales  force   Vertreterorganisation,  Mitarbeit/innen  im  Außendienst     Sales  force  is  a  collective  term  denoting  those  employees  of  a  firm  who  are   engaged  in  selling  its  product(s).  Although,  strictly  speaking,  the  expression  can   be  applied  to  both  staff  taking  orders  behind  a  sales  counter  and  those

 actually   calling  on  prospective  and  existing  customers,  it  normally  refers  only  to  people   selling   in   the   field,   variously   called   sales   representatives,   sales   reps,   commercial   travelers,  field  executives,  sales  engineers,  etc.     Managing   a   company’s   sales   force   is   a   complex   task,   usually   entrusted   to   the  firm’s  sales  manager.  It  involves,  among  other  things,  selecting  and  training   the   members   of   the   sales   force,   assigning   particular   territories   to   them,   fixing     49   Source: http://www.doksinet sales   quotas,   developing   a   call   policy,   digesting   information   passed   on   by   the   salespeople,  fixing  their

 compensation  and  finally,  evaluating  their  performance.       (108)  Trade  fair   Messe     Trade  fairs  are  complex  promotional  events  staged  to  enable  companies  to   exhibit   their   products,   meet   customers   and   snoop   on   competitors.   Although   participating   in   a   fair   is   quite   expensive,   fairs   offer   a   number   of   benefits   as   compared   with   other   promotional   instruments.   The   most   important   such   advantage   is   certainly   the   opportunity   for   face-­‐to-­‐face   contact   with   visitors,   be   they   trade   or   private.   The   feedback   they   provide,   eg   in   the   form   of   spontaneous   comments,  criticism  or  praise,  may

 be  difficult  to  obtain  in  any  other  way.     To  be  successful,  participation  in  a  fair  has  to  be  planned  carefully  by  the   exhibiting  enterprise.  A  suitable  event  has  to  be  selected,  the  organisers  have  to   be   contacted,   and   information   on   the   costs   involved   must   be   obtained.   Then   a   decision  has  to  be  made  on  whether  to  invest  in  an  individual  stand  (or  booth)  or   to   participate   in   a   joint   stand,   often   organized   by   the   company’s   trade   association  or  its  government.  If  the  firm  opts  for  a  stand  of  its  own,  a  favourable   location   has   to   be   chosen   on   the   fair

  site   or   in   the   fair   building.   The   stand   can   be   designed,  built  and  erected  by  the  exhibitor  in-­‐house,  or  the  job  may  be  farmed   out  to  specialists,  called  stand   designers  or  fair   contractors.  Alternatively,  it  may   be  rented  from  the  organisers  of  the  event  under  what  is  commonly  known  as  a   shell-­‐stand   scheme.   Then   the   products   to   be   displayed   at   the   fair   have   to   be   selected,   packed   and   shipped,   perhaps   together   with   the   knocked-­‐down   stand,   staff   have   to   be   recruited   and   trained,   and   promotional   literature   has   to   be   prepared.  On  the  fair  site  itself,

 the  firm’s  managers  supervise  the  erection  and   furnishing  of  the  stand  as  well  as  the  final  positioning  of  the  exhibits.     During  opening  hours,  the  stand  has  to  be  manned  by  a  sufficient  number   of   polite   and   well-­‐informed   staff,   who   are   able   and   willing   not   only   to   provide   information  and  answer  questions  but  also  to  drink  with  existing  or  prospective   customers   –   all   exclusively   to   promote   sales,   of   course.   After   closing   day,   the   firm’s  managers  and  other  employees  may  be  involved  in  dismantling  the  stand   and   getting   it   shipped   back   to   home   base,   together   with

  the   exhibits.   More   important,   however,   is   the   evaluation   of   the   whole   exercise,   often   facetiously   referred   to   as   the   “post-­‐mortem”.  Criteria   useful   in   evaluating   participation   in   a   fair  are:  the  number  of  visitors  to  the  stand,  the  amount  of  promotional  literature   distributed,  the  volume  of  orders  placed,  the  volume  of  follow-­‐up  orders,  etc.       (109)  Sales  promotion   Verkaufsförderung     According  to  Kotler,  sales  promotion  is  a  collection  of  promotional  tools  not   formally   classifiable   as   advertising,   personal   selling,   public   relations,   or   direct   marketing.  It  can  be  subdivided  into

 consumer  promotion  (eg  special  offers,  free     50   Source: http://www.doksinet samples,   coupons,   premiums,   contests),   trade   promotion   (e.g   dealer   sales   contests)   and   sales-­‐force   promotion   (e.g   bonuses   or   contests)   In   contrast   to   other   element   of   the   marketing   mix,   sales   promotion,   especially   consumer   promotion,  tends  to  have  a  short-­‐term  focus.  For  example,  a  price  cut  intended  to   remain  in  place  for  a  considerable  period  of  time  forms  part  of  a  company’s  price   policy,   while   this   week’s   special   offer   would   be   classified   as   sales   promotion.   Moreover,  consumer  promotion  is  typically  geared

 to  the  point  of  sale,  although   in-­‐store   promotional   efforts   are   often   supported   by   mass-­‐media   advertising.   A   TV   commercial   calling   the   audience’s   attention   to   short-­‐term   price   cuts   offered   by   a   supermarket   chain   would   be   a   case   in   point.   From   a   global   marketing   perspective,   it   is   worth   mentioning   that   sales   promotion   is   perhaps   more   difficult  to  standardise  than  other  elements  of  the  promotional  mix.       (110)  Premium4   Werbegeschenk,  kleine  Zugabe     One  of  the  many  applications  of  the  term  premium  is  in  retailing,  where  it   may   refer   to   a   small   item   given

  away   –   or   sold   at   a   favourable   price   –   in   conjunction   with   the   purchase   of   another   article.   The   small   plastic   toys   sometimes   found   in   packets   of   breakfasts   cereals   are   called   premiums,   as   are   the   slightly  more  valuable  toys  which  can  be  obtained  from  the  seller  of  a  particular   product  by  sending  in  a  coupon  detachable  from  its  package.       (111)  Direct  marketing   Direktmarketing     Direct   marketing   is   a   rather   diffuse   concept.   Sometimes   the   expression   simply   covers   direct   mail   and   telemarketing   (or   telephone   marketing),   two   promotional  activities  which  fall  somewhere

 between  personal  (i.e  face-­‐to-­‐face)   selling   and   advertising,   and   represent   a   useful   addition   to   the   range   of   classic   promotional   tools.   Some   authors,   however,   regard   it   as   a   catch-­‐all   term   for   the   various  different  types  of  non-­‐store,  or  home,  retailing  (e.g  mail  order,  catalogue   and  TV  retailing,  electronic  selling),  in  which  case  direct  marketing  is  seen  as  a   special  channel  of  distribution.  The  best  plan  is  to  combine  the  two  approaches   In  all  three  senses,  direct  marketing  is  characterised  by  microsegmentation  and   precision  targeting,  i.e  the  identification  of  very  small  groups

 of  consumers  to  be   targeted  by  a  company’s  marketing  efforts.  This  involves  using  data  bases,  which   may  be  acquired  from  outside  or  developed  in-­‐house,  e.g  from  pint-­‐of-­‐sale  data   captured  by  EFTPOS  systems.     Direct   marketing   makes   it   possible   for   companies   to   access   fairly   small   target  groups  and  adjust  their  marketing  activities  accordingly.  This  tailor-­‐made   approach  avoids  waste  and  enables  them  to  better  satisfy  the  wants  and  needs  of   consumers.   As   already   indicated,   direct   mail   and   telemarketing   are   the   most   important   delivery   systems   employed   in   this   field.   Both   methods   are

  cheaper   and,  if  planned  carefully,  not  much  less  efficient  than  personal  selling.  Whether   Internet   marketing   (also   termed   online   marketing   or   e-­‐marketing)   is   a   form   of     51   Source: http://www.doksinet direct   marketing   or   not   depends   on   the   definition   of   the   term   and   on   what   is   actually   done   through   the   Internet.   Just   opening   a   homepage   including   the   company’s   offering   and   maybe   some   information   on   how   to   order   the   product   offered  (e.g  by  e-­‐mail)  does  not  in  itself  constitute  direct  marketing     Successful   examples   of   direct   marketing   can   be   found   both   in   the

  field   of   consumer   goods   (e.g   motor   cars)   and   in   the   service   sector   (eg   air   travel,   insurance,  banking).  One  only  has  to  think  of  the  large  number  of  frequent-­‐filter   programmes,  or  the  many  direct  banking  and  insurance  operations  set  up  in  the   past   few   years   (e.g   HSBC’s   First   Direct)   It   is   not   impossible   to   apply   the   same   principles   to   the   marketing   of   industrial   goods,   in   which   case   experts   sometimes   use  the  expression  business-­‐to-­‐business  marketing.       52   Source: http://www.doksinet Unit  10  –  Marketing  III:  Distribution     (112)  Distribution   Distribution    

Distribution   refers   to   all   economic   activity   concerned   with   getting   goods   from  manufacturers  to  final  consumers.  In  other  words,  distribution  provides  a   link   between   production   and   consumption.   It   includes   buying   and   selling   (ie   transfer  of  ownership)  as  well  as  other  activities  of  marketing  intermediaries  in   the   channel   of   distribution,   physical   distribution   (i.e   transportation   and   storage),   but   also   such   auxiliary   services   as   banking,   finance,   insurance   and   promotion,  which  speed  up  and  generally  facilitate  the  distribution  process.     Distribution   creates   utility   and   adds   value,   not   by   changing   the

  form   of   products   (as   in   the   case   with   production)   but   by   making   them   available   to   ultimate   consumers   where   and   when   required.   Distribution   creates   time   and   place  utilities,  and  is  therefore  productive  in  the  wider  sense  of  the  word.     From  a  marketing  point  of  view,  the  distinction  between  the  two  concepts   of   “channel   of   distribution”   and   “physical   distribution”   is   very   important.   A   typical   channel   decision   would   be   concerned   with   the   number   and   types   of   intermediaries   to   be   used   in   the   distribution   process.   By   contrast,   physical   distribution   decisions   focus   on  

selecting   the   most   suitable   mode   of   transport   (e.g   Should   we   send   the   good   by   rail   or   air?)   and   proper   storage   methods   (eg   Should   we   erect   our   own   distribution   depot   or   use   public   warehouses?).  In  view  of   the   ever  increasing  importance  of  the  tertiary  sector  in   today’s   economies,   it   is   relevant  to  add  that  the  concept  of  distribution  is  also  applied,  mutatis  mutandis,   to  the  service  industries.       (113)  Logistics   Logistik     Logistics   can   be   defined   as   the   process   of   planning,   implementing   and   controlling   the   cost-­‐efficient   flow   and   storage   of   materials,  

equipment,   in-­‐ process   inventory   (e.g   components,   subassemblies),   semi-­‐finished   and   finished   goods,   and   related   information   between   the   point   of   production   and   the   point   of   consumption.  Increasingly,  this  concept  is  being  interpreted  to  include  recycling   and   disposal.   Strictly   speaking,   this   is   a   definition   of   business   logistics,   because   the  term  logistics  can  also  be  applied  in  military  contexts,  where  it  was  first  used.   One  of  the  differences  between  military  logistics  and  the  business  variety  is  that   the   former   additionally   involves   the   movement   and   accommodation   of   people.   Although   the  

definition   of   business   logistics   given   above   refers   primarily   to   managing  the  flow  of  goods,  the  concept  can  also  be  usefully  applied  to  service   organisations.     The   total   flow   process   can   be   divided   into   the   section   upstream   from   the   point  of  production,  which  is  called  materials  management,  and  that  downstream   from   the   same   point,   which   is   referred   to   as   physical   distribution.   Materials     53   Source: http://www.doksinet management  is  normally  regarded  as  part  of  manufacturing  management,  while   physical   distribution   is   often   classified   as   a   marketing   activity,   viz.   the   physical   aspect  of

 the  third  P  of  the  marketing  mix  (i.e  place/distribution)     The   tasks   of   business   logistics,   or   rather   of   business   logisticians,   are   neatly   summarised  in  the  “seven  rights”  of  logistics,  viz.  ensuring  the  availability  of  the   right  product,  at  the  right  time,  in  the  right  quantity,  in  the  right  condition,  at  the   right  place,  for  the  right  customer,  at  the  right  cost.     The  importance  of  business  logistics  for  the  economy  as  a  whole  should  not   be   underestimated.   In   the   US,   for   instance,   it   accounted   for   11%   of   GNP   in   1991,   with  around  350  billion  dollars  being  spent  on

 freight  transportation,  about  220   billion   dollars   on   warehousing   and   inventory-­‐carrying,   and   approximately   30   billion   dollars   on   managing   the   logistics   system   and   associated   communication   activities.       (114)  Channel  of  distribution   Distributionskanal,  Absatzweg     A   channel   of   distribution,   also   referred   to   as   a   chain   of   distribution   or   marketing   channel,   is   a   set   of   marketing   intermediaries   between   the   manufacturer  of  a  particular  product  and  its  final  user.  Channels  of  distribution   can  be  characterised  as  having  a  certain  number  of  stages.  A  zero-­‐stage  channel   is   one   which   leads   from

  the   producer   directly   to   the   final   user   (e.g   door-­‐to-­‐door   selling  and  direct  mail).  A  one-­‐stage  channel  features  one  type  of  intermediary,   e.g   retailers   that   are   supplied   by   the   producer   directly   A   two-­‐stage   channel   includes   two   types   of   middlemen,   e.g   wholesalers   and   retailers,   intervening   between  the  producer  and  the  final  users.     The  selection  of  a  proper  chain  of  distribution,  i.e  deciding  on  the  number   and   types   of   intermediaries   to   be   used   in   the   distribution   process,   is   an   important   aspect   of   marketing   management.   Decisions   in   this   area   will   affect,  

among  other  things,  the  total  cost  of  the  product  to  be  distributed  as  well  as  the   volume   of   sales.   A   long   channel   of   distribution,   including   a   large   number   of   intermediaries,   will   –   all   other   things   being   equal   –   increase   the   cost   of   the   product,   while   the   volume   of   sales   will   be   closely   related   to   the   quality   and   extent  of  the  intermediaries’  own  marketing  efforts.       (115)  Retailer   Einzelhändler,  Detaillist     Retailers,  i.e  firms  that  specialise  in  catering  to  the  final  consumer,  are  the   last   link   in   the   chain   of   distribution,   which   starts   with   the

  manufacturer.   However,  retailing  is  not  the  exclusive  domain  of  retailers.  In  fact,  any  company   that   sells   to   final   consumers   makes   retail   sales.   A   manufacturer   distributing   cosmetics  door-­‐to-­‐door  is  engaged  in  retailing,  and  so  is  a  farmer  selling  apples   from   a   roadside   stand.   Conversely,   there   are   many   big   retail   firms   that     54   Source: http://www.doksinet deliberately  combine  manufacturing  and  retailing.  Examples  can  be  found  in  the   field  of  consumer  co-­‐operatives  and  grocery  chains.  The  Swiss  Migros  chain,  for   instance,   itself   produces   a   fairly   large   proportion   of   its   product   range  

(e.g   coffees,   jams   and   chocolates)   in   its   own   factories.   It   is,   however,   difficult   for   customers  and  analysts  to  determine  the  exact  mix  between  goods  produced  in-­‐ house   and   those   procured   from   outside   suppliers   (bought-­‐in   goods)   because   large   retailers   often   put   their   own   labels   (referred   to   as   dealer  brands,  retailer   brands,  store  brands,  private  brands  and  private  labels)  on  both  types  of  goods.     Retailing   proper   is   a   vast   industry   with   millions   of   outlets,   catering   for   every   conceivable   need,   and   with   sales   running   into   hundreds   of   billions   of   dollars.   Since  

retail   stores   must   be   close   to   the   final   consumer,   only   a   limited   degree   of   centralisation   (e.g   in   shopping   centres)   is   possible,   which   explains   the   large  number  of  individual  shops.     To   a   large   extent,   retailing   used   to   be,   and   still   is,   a   national   –   or   even   a   local   –   activity,   far   more   so   than,   for   instance,   heavy   industry   and   manufacturing   in   general.   The   reasons   for   this   are   not   difficult   to   find   The   marketing   of   consumer   goods   is   much   more   dependent   on   national   or   local   preferences   and   tastes,  and  retailers  prefer  to  serve  markets

 which  they  understand.  Only  fairly   recently   has   the   pace   of   internationalisation   in   retailing   quickened,   with   big   retail  firms  starting  to  generate  an  even  increasing  proportion  of  their  revenues   and   profits   outside   their   home   countries.   The   preferred   method   of   entering   foreign  markets  seems  to  be  franchising.     Retail  shops  may  be  classified  in  a  number  of  different  ways:  according  to   size   (e.g   supermarkets,   hypermarkets,   neighbourhood   stores),   according   to   type   and   range   of   goods   sold   (e.g   hardware   stores,   food   stores,   limited-­‐line   stores,   department   stores),   according   to   price   policy  

(e.g   discount   stores,   upscale   retailers),   according   to   selling   method   (e.g   mail-­‐order   firms,   catalogue   operators,   automatic   vending   machine   operators)   or   according   to   ownership   (e.g   independent   retailers,   chain   stores)   However,   any   classification   in   this   field   is   bound   to   be   incomplete,   because   modern   retailers   are   great   innovators   and   keep  coming  up  with  new  retail  formats  such  as  in-­‐store  boutiques,  teleshopping,   warehouse  clubs  and,  last  but  not  least,  e-­‐tailing.       (116)  Department  store   Kaufhaus,  Warenhaus     Department  stores  are  large  retail  establishments  offering  a  wide  range  of  

goods,   the   main   emphasis   being   on   such   shopping   items   as   furniture,   women’s   clothing,   curtains,   flooring   and   bedding.   Other   lines   carried   are   leather   goods,   cameras,   radio   and   TV   sets,   personal   computers,   toys   and   games.   In   addition,   department   store   customers   are   offered   services,   including   travel,   sports,   insurance,  investment,  cleaning,  and  car  hire.     The   term   department   store   obviously   derives   from   the   fact   that   the   assortment  of  goods,  as  well  as  many  activities  related  to  them  (e.g  buying  and     55   Source: http://www.doksinet selling),  are  segregated  into  separate  departments,  each

 under  its  own  “buyer”,   as   a   department   manager   is   known   in   this   context.   Advertising,   delivery,   staff   training,   and   other   general   activities   are,   however,   carried   out   centrally   for   all   departments.   The   main   selling   point   of   department   stores   is   their   ability   to   supply  all,  or  at  least  most,  of  a  customer’s  retail  needs  under  one  roof.  Slogans   like  one-­‐step  shopping  or  we  supply  everything  from  a  needle  to  a  crocodile  testify   to   this   fact.   The   convenience   of   one-­‐step   shopping   may   help   to   offset   certain   disadvantages  such  as  the  rather  impersonal  atmosphere  and  the

 limited  range   of  goods.  Department  stores  may  be  independent,  ie  single-­‐unit  firms,  or  belong   to  a  large  chain.       (117)  Stockist   Fachhändler,  Fachgeschäft     Stockists   (also   called   limited-­‐line   stores)   are   retail   outlets   which   carry   a   restricted   range   of   goods.   They   may   be   independently   owned   or   belong   to   a   larger  organisation  (e.g  a  chain)  Usually,  they  specialise  in  one  particular  line  of   products,   e.g   electrical   appliances,   shoes,   consumer   electronics,   furs,   or   men’s   fashions.  Their  appeal  to  the  consumer  is  based  on  a  carefully  selected  range  of   high-­‐quality   products,  

personal   service,   expert   advice,   and   after-­‐sales   service.   These   advantages   help   to   offset   the   somewhat   higher   prices   associated   with   relatively  low  sales  volumes  (especially  in  comparison  with  discount  stores).       (118)  Unit  shop   Einzelgeschäft     A   typical   unit   shop   is   a   small,   independent,   owner-­‐operated   retail   establishment.   The   term   emphasises   the   fact   that   there   is   only   one   outlet   Unit   shops,  which  can  be  found  in  many  different  lines,  are  facing  heavy  competition   from  large  retail  concerns,  especially  supermarkets  and  discount  stores.  In  spite   of  this,  many  are  able  to  hold

 their  own  and  at  least  eke  out  an  existence,  because   they  enjoy  certain  advantages  inherent  in  small-­‐scale  operations.  These  include:   flexibility,   absence   of   red   tape,   personal   interest   of   the   owner   and   his   family   (reflected   in   the   expression   mom-­‐and-­‐pop  store),   friendly   atmosphere,   personal   service,   convenient   location   (reflected   in   the   terms   convenience   store,   neighbourhood  store  and  corner  shop),  low  overheads,  etc.  the  disadvantages  are   equally  obvious:  low  volume,  higher  prices,  small  catchment  area,  small  number   of   customers,   limited   range   of   goods,   low   profits   and   low   return   on  

capital   invested,   especially   if   determined   after   allowing   for   what   the   owner-­‐operator   would  earn  as  an  employee  in  a  comparable  job,  i.e  the  earnings  of  management       (119)  Multiple  store   Filialunternehmen,  Filialist,  Ladenkette,  Filialkette     A  multiple  store  (also:  multiple  shop;  US:  corporate  chain  store)  consists  of   two   or   more   outlets   which   are   centrally   owned   and   operated.   This   centralised     56   Source: http://www.doksinet method   of   operation   offers   a   number   of   advantages.   It   permits   the   standardisation  of  shopfronts,  story  layouts,  product  range,  advertising,  displays,   etc.,  as  well  as  the

 use  of  highly  trained  marketing  specialists,  all  of  which  tends   to   make   for   economies   and   higher   productivity.   As   a   result,   multiples   are   frequently   able   to   sell   their   goods   at   lower   prices   than   small   independent   retailers  with  only  one  or  two  outlets.  There  are,  however,  a  number  of  offsetting   disadvantages.  Multiple  stores  are  less  flexible  than  unit  shops,  and  less  able  to   react  quickly  to  changes  in  local  demand  and  meet  competitors’  price  reductions.   That   is   why   some   multiples   have   begun   to   give   their   local   managers   more   discretion   in   certain   areas   of   management,   with

  the   consequent   loss   of   some   benefits  of  centralisation.       (120)  Mail  order   Versandgeschäft,  Versandhandel     Mail  order  is  a  system  of  retailing  under  which  a  customer  places  an  order   with  a  specialist  retailer  by  mail  or,  increasingly,  by  telephone,  and  the  goods  so   ordered   are   delivered   to   his   home,   either   through   the   post   or   by   one   of   the   modern   parcel   service.   Shopping   is   done   from   a   catalogue   produced   by   the   mail-­‐ order  firm  concerned  and  sent  to  prospective  customers  direct  or  shown  to  them   by   part-­‐time   agents.   That   is   why   the   system   is   sometimes  

referred   to   as   catalogue   selling   or  catalogue   retailing,   and  the  operator  involved  may  be  called   catalogue   firms   or   catalogue   operators,   although   these   latter   terms   also   have   a   more  restricted  meaning.     Like  other  retailers,  mail-­‐order  firms  can  offer  a  greater  or  a  more  limited   variety   of   goods.   Some   emphasise   value,   others   try   to   create   an   upscale   image   Generally   speaking,   there   has   been   a   tendency   for   companies   in   this   field   to   move  upmarket,  adding  more  expensive  items  to  their  range  of  products.     Payment   for   goods   bought   by   this   method   can   be   based   on

  COD,   which   means   that   the   invoice   amount,   including   a   handle   charge,   is   collected   by   the   organisation   delivering   them.   Alternatively,   the   mail-­‐order   company   may   be   prepared   to   grant   credit,   allowing   its   customers   to   pay   by   credit   transfer   or   cheque   some   time   after   they   have   received   their   goods.   The   most   convenient   method,   however,   is   to   use   a   credit   card,   with   the   buyer   giving   the   retailer   his   credit  card  number  and  permitting  him  to  charge  the  invoice  amount  in  the  usual   way.     It  is  possible  for  mail-­‐order  firms  to  use  inexpensive  premises  in

 off-­‐high-­‐ street  locations  and  unskilled  labour,  thus  reducing  the  operating  costs.  For  the   customer,   the   main   attractions   are   the   convenience   of   “fireside   shopping”   and   the   ease   with   which   he   can   get   credit.   Against   these   advantages   one   must   set   the   high   cost   of   catalogues   and   advertising,   the   need   to   hold   large   stocks,   the   impossibility   of   changing   prices   or   the   range   of   goods   offered   once   catalogues   have   been   printed,   and   the   lack   of   personal   contact.   In   spite   of   the   system’s   obvious  attractions,  in  spite  of  mail-­‐order  firms  moving  upmarket,  and  in

 spite  of   the  deployment  of  modern  technology,  catalogue  selling  has  not  really  taken  off     57   Source: http://www.doksinet and   nowhere   accounts   for   more   than   a   tiny   fraction   of   total   retail   sales.   One   of   the   reasons   cited   by   marketing   experts   is   that   many   people   actually   like   the   hassle  involved  in  a  trek  to  a  supermarket.     Recently,   mail   order   has   become   part   of   a   wider   retail   concept,   viz.   home   shopping.  This  additionally  includes  teleshopping,  where  catalogues  are  replaced   with   TV   programmes,   and   interactive   computer   shopping   (e.g   through   the   Internet).   In   the   latter  

case,   the   search   process   is   controlled   by   the   customer,   who   can   place   his   order   and   authorise   payment   on-­‐line   from   his   personal   computer.       (121)  Wholesaler   Großhändler,  Grossist     Typically,   a   wholesaler   buys   in   large   quantities   from   manufacturers   and   sells   in   smaller   quantities   to   retailers.   But   strictly   speaking,   wholesale   transactions   need   not   be   carried   out   by   wholesalers,   nor   need   the   quantities   involved   be   large.   Any   sale   to   a   business   customer   or   institution   of   goods   or   services  not  intended  for  personal  use  represents  a  wholesale  transaction.  This   means

 that  retailers  or  manufacturers  can  also  engage  in  wholesaling.  The  term   wholesaler,   however,   is   normally   reserved   for   firms   whose   principal   business   activity   is   wholesaling.   Another   distinction   that   should   be   observed   is   the   one   between   (merchant)   wholesalers   and   (agent)   wholesaling   middlemen.   A   wholesaler  buys  and  sells  for  his  own  account,  taking  title  to  the  goods,  while  a   wholesaling  middleman  (such  as  a  broker)  acts  for  his  principal’s  account.     Wholesalers,   in   the   US   also   referred   to   as   distributors   or   jobbers,   provide   marketing   services   that   are   essential   in   the   process   of

  moving   goods   from   manufacturers  to  consumers.  Being  specialists,  wholesalers  are,  however,  more   likely   to   provide   these   services   efficiently   and   at   low   cost.   For   instance,   six   manufacturers  selling  to  four  retailers  would  result  in  24  transactions.  By  using   the  services  of  one  wholesaler,  the  number  of  transactions  can  be  reduced  to  ten.   Specialised   services   offered   by   wholesalers   to   manufacturers   or   retailers,   or   both,   include:   delivery,   storage,   credit,   market   information,   personal   selling,   assembling  and  dividing,  and  related  matters.     Wholesalers   may   be   classified   either   on   the   basis   of   the

  range   of   goods   offered   or   according   to   the   services   provided   by   them.   Thus   there   are   general-­‐ line   wholesalers   (e.g   food   wholesalers)   and   specialty   wholesalers   (eg   frozen   food  wholesalers),  or  full-­‐service  and  limited-­‐service  wholesalers  (e.g  cash-­‐and-­‐ carry   wholesalers).   Rack   jobbers   are   full-­‐service   wholesalers   specialising   in   a   particular  line  of  goods  (e.g  books)     The   advent   of   the   Internet   has   created   both   opportunities   and   threats   for   wholesaling.  While  more  and  more  wholesalers  are  using  various  B2B  formats  to   improve   efficiency   in   their   operations,   some   manufacturers  

have   started   bypassing  wholesalers  altogether,  selling  their  products  on-­‐line  to  retailers  and   end-­‐users.     58