Greek bottler gets into former Soviet Union

(Newspaper item)

Hellenic Bottling Company (HBC), the Coca-Cola franchise-holder for Greece and Bulgaria, after scoring a success in Balkans, has turned to markets to the former Soviet Union in search of further growth.

Mr. Lukas Konis, HBC’s corporate affairs director points out: “There is some margin for expansion in Greek market, but the growth area is Eastern Europe and the ex-Soviet Union”. Hellenic Bottling Company is now modernising a bottling plant in Armenia to produce Coca-Cola and has acquired a larger share of its parent group’s soft drinks bottling operations in Moldavia and parts of Rumania and Russia.

The company belongs to the Cypriot-owned Levant’s group, a leading independent Coca-Cola bottles, with franchises in Nigeria and Ireland. The Levant’s group has a 80 per cent share of the Greek soft drinks market.

HBC increased pre-tax profits in 1997 to Dr. (drachma) 25.9 bn (billion) and sales rose 20 per cent to Dr. 140 bn.

Last October it reported consolidated first half-year profits up 17 per cent to Dr. 72 bn.

NOTES:

Greek Bottler gets into the former Soviet Union - греческая фирма по производству напитков

выходит на рынки бывшего Советского Союза;

bottle – бутылка;

franchise - франшиза: право на производство продукции другой, как правило, хорошо

известной компании;

the Coca-Cola franchise holder - владелец франшизы на производство Кока-Колы;

to score a success - добиться успеха;

in search of smth - в поисках чего-либо;

affairs – дела;

margin - прибыль, разница между себестоимостью и продажной ценой;

expansion - расширение;

to acquire – приобретать;

share – доля;

parent group – головная группа;

Cypriot – киприот;

pre-tax profit - прибыль до налогообложения;

Dr. = drachma - драхма (денежная единица Греции);

bn = billion – биллион;

to report - сообщать;

consolidated profits - консолидированная прибыль - прибыль корпораций и ее дочерних

компаний;

Greek bottler - греческая фирма по производству напитков.

Exercise 2. Point out the paragraph about the pre-tax profits of HBC (Hellenic Bottling Company).

Lesson 8

Text A

INFLATION

Inflation is considered by most people as equal only to unemployment among the nation’s major economic problems. The rising cost of groceries, auto repairs, medical services, clothes, travel and everything else is a main topic of conversation among consumers. Business firms realise that higher prices for materials, labour equipment and other things they buy will reduce business profits. A national goal of government economic policy is to stabilise the price level. All groups comprising the population – consumers, unions, business firms and government are concerned about inflation.

Inflation is generally defined as a persistent rise in the general price level with no corresponding rise in output which leads to a corresponding fall in the purchasing power of money. In this article we shall look briefly at the problems that inflation causes for business and consider whether there are any potential benefits for an enterprise from an inflationary period.

Inflation varies considerably in its extent and severity. Hence, the consequences for the business community differ according to circumstances. Mild inflation of a few percent each year may pose few difficulties for business. However, hyperinflation, which entails enormously high rates of inflation can create almost insurmountable problems for the government, business, consumers and workers. In post-war flummery, the cost of living was published each day and workers were paid daily so as to avoid the valley of the earnings falling. Business would have experienced great difficulty in costing and pricing their production while the incentive for people to save would have been removed. Economists would, however, recognize that two general types of inflation exist:

1.Demand-pull inflation.

2.Cost-put push inflation.

Demand-pull inflation.

Demand-pull inflation occurs when demand for a nation’s goods and services outstrips that nation’ s ability to supply these goods and services. This causes prices to rise generally as a means of limiting demand to the available supply. This type of inflation occurs when injections exceed withdrawals and the economy is already stretched (i.e. little available labour or factory space) and there is little scope to increase further its level of activity.

Cost-push inflation.

Alternatively, inflation can be of the cost-push variety. This takes place when firms face increasing costs. This could be caused by an increase in wages owing to trade union militancy, the rising costs of imported raw materials and components or companies pushing up prices in order to improve their profit margins.

NOTES:

unemployment – безработица;

to consider – считать, рассматривать;

to rise price – повышать цену;

level = standard – уровень;

to concern – беспокоиться;

a persistent rise – неуклонный подъем;

with no corresponding rise in output - не сопровождающийся подъемом производства;

briefly – коротко, кратко;

potential benefits – потенциальные выгоды;

varies considerably in = its extent and severity – бывает разной по длительности и остроте;

hence - следовательно;

mild inflation - мягкая, низкая инфляция;

may pose few difficulties - особых проблем не представляет;

entails enormously high rates of inflation - означает (ведет к) громадный рост инфляции;

insurmountable - неисчисляемые, колоссальные;

to pull - тянуть;

demand-pull inflation -инфляция, вызванная превышением спроса над предложением;

инфляция спроса;

to push - толкать;

cost-push inflation - инфляция, вызванная ростом издержек производства; инфляция

издержек;

to occur - происходить;

to outstrip - обгонять, опережать, превосходить;

to stretch - натягивать, напрягать;

little available labour - мало рабочей силы;

there is little scope - мало возможностей;

owing to trade-unions militancy - благодаря воинственности профсоюзов;

in order to improve their profit margins - чтобы увеличить размеры прибыли;

to withdraw - изымать, вывозить, удалять;

withdrawals - утечка, изъятие;

injection - инъекция, вливание (денег в экономику).

COMPREHENSION QUESTIONS:

1. What is inflation?
2. What does inflation lead to?
3. What difference is there between mild inflation and hyperinflation?
4. How is inflation considered by most people?
5. What two general types of inflation exist?
6. When does demand-pull inflation occur?
7. When does cost-push inflation take place?
8. What is a national goal of government economic policy?

VOCABULARY EXERCISES:

Exercise 1. Suggest the Russian equivalents:

As equal only to unemployment; the rising cost of groceries; reduce business profits; to stabilise the price level; concern about inflation; inflation varies considerably in its extent and severity; mild inflation of few per cent; rate of inflation; insurmountable problems; demand-pull inflation; cost-push inflation; the economy is already stretched.

Exercise 2. Replace the underlined words by synonyms:

A persistent rise; hence; may pose few difficulties; which entails enormously high rates; inflation occurs when; little scope to increase its level of activity; firms face increasing costs; owing to trade union militancy.

Exercise 3. Fill in the gaps with the words and expressions from the text:

1. Inflation varies considerably in its ___ and ___.
2. Mild inflation may ___ few difficulties for business.
3. Business would have experienced great difficulty in ___ and ___ their production while ___ for people to save would have been removed.
4. Demand-pull inflation occurs when ___ for a nation’s goods and services ___ that nation’s ability to ___ these goods and services.
5. This type of inflation occurs when injections___ withdrawals.
6. An increase in costs for firms, for example, can be caused by an increase in wages ___ trade union militancy.

Exercise 4. Find in the text English equivalents for the following:

Oсновная тема разговора среди потребителей; стабилизировать ценовой уровень (цены); беспокоиться об инфляции; повышение (падение) спроса (покупательной способности); гиперинфляция, мягкая (низкая) инфляция; запросы опережают возможности экономики предложить товары и услуги; воинственность профсоюзов; уровень прибыли.

Exercise 5. Translate sentences into English using all the active possible:

1) Следует отличать инфляцию спроса от инфляции, обусловленной ростом издержек.

2) Суть инфляции спроса иногда объясняют одной фразой: «Слишком много денег охотятся за слишком малым количеством товаров».

3) Теория инфляции, обусловленной ростом издержек, объясняет рост цен такими факторами, которые приводят к увеличению издержек на единицу продукции.

Exercise 6. Divide the text into logical parts and make up a plan of your own.

Exercise 7. Explain the main idea of the text by your own words.

Exercise 8. Make up bits of conversation using the following formulas expressing advice:

1. You are advised (not) to... - советуем Вам (не) + -инф.;

2. Try to... - попытайтесь + инф.;

3. You should... - Вам следует...;

4. It is worth + -ing - стоит + инф.;

5. It is suggested... - нужно...;

6. It is advisable... - рекомендуется...;

7. It is wise to... - разумно было бы...;

8. It is better to... - лучше + инф.;

9. It is best to... - лучше всего...

Text B

Exercise 1. Read the text without using a dictionary and answer the following questions:

1. How many economic effects of inflation exist?

2. Is the impact of inflation even or uneven? Why?

3. Who is hurt by inflation?

4. Whose real income does inflation reduce?

5. Whose real income does inflation increase?

Inflation affects the distribution of income, the allocation of resources and the national output. There are three types of economic effects of inflation such as the equity effects, the efficiency and output effects of inflation.

Equity effects.

The impact of inflation is uneven. Some people benefit from inflation and some are made worse off. Because inflation alters the distribution of income, a major concern is the degree of equity in the distribution of income.

Anyone who is on a fixed income is hurt by inflation, since it reduced real income. For example, a person, who earns $20.000 a year during an inflationary period in which there is a 25 per cent increase in the price level suffers a cut in real income equivalent to the rate of inflation - $5.000 in this illustration. Examples of those whose incomes often do not rise as fast as the price level are retired people on pensions, white-collar workers, civil servants, people on public assistance and workers in declining industries.

Inflation benefits people who have incomes that rise faster than prices and those who hold assets whose values rise faster than the price level. Wages and salaries of workers in rapidly growing industries are likely to rise faster than the price level. People who depend on income in the form of profits - owner of stocks and business enterprises - may have increases in real income, depending upon the rate of increase in profits in comparison to prices.

Inflation is like a tax to some people and like a subsidy to others. Real incomes of people who have fixed incomes and hold assets in the form of money are reduced by inflation. People whose real incomes are increased by inflation are those who have money income that increases faster than prices and hold real assets that appreciate value faster than inflation.

NOTES:

to appreciate - повышаться в цене;

equity - справедливость, честность;

uneven - неровный;

allocation - размещение, распределение;

effect - воздействие, влияние, осуществление;

efficiency - производительность, рентабельность, продуктивность;

output - выпуск, выход продукции;

alter = change - изменить(ся);

a fixed income - постоянный доход;

to hurt - ударять, причинять вред, страдать от;

to suffer a cut - терпеть, нести снижение (сокращение);

retired people on pension - люди, ушедшие на пенсию;

white-collar worker - служащий;

civil servants - государственные служащие, чиновники;

declining industries - отрасли промышленности, приходящие в упадок;

to hold assets - владеть (иметь) активы (имущество);

a tax - налог.

Exercise 2. Point out the sentences which tell about reducing real income of a person by inflation.

Lesson 9

Text A

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