English for business

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English for Economic Sciences

Adriana Vintean

Communication is essential to life and imperative if business is to prosper and survive in a competitive environment.

It can be:

Verbal - the written word

Oral - the spoken word

Visual - the illustration

Numerical - the written and interpreted number

Electronic - using a computer

Communication should be received and understood so we must ask ourselves not what we want but what the audience wants.

The term communication skills covers a number of defferent areas, including:

-speaking clearly, fluently, convincigly.

-understanding and responding to non verbal communication(body language).

-Producing effective written communications, including briefs and presentations.

In business life it' s important not only to be efficient and do your job but also to look and sound friendly, confident, sincere and helpful.

Poor communication is the cause of all breakdowns in business relationships.

When they try to communicate people go through different stages and the lack of care at any of them lead to confusion and wasted time and energy.

1.The need or desire to communicate with someone else- aiming.

2.The translation of internal thoughts and feelings into an external means of transmitting them as a coherent message- encoding.

3.The transmission of the message(spoken, pictorial, written, body language, tone of voice, timing)- transmitting.

4.The reception of the message(how and why people listen)-receiving

5.The translation of the message to internal thoughts and feelings on the part of the receiver-decoding.

6.The need or desire to respond to the message that has been sent(thinking, feeling, planning internally, setting objectives)-responding.

A successful communication is meant to beware that the meaning of the message is the responsibility of the sender first. Having decided what it is that you need to communicate and whom you are going to communicate with, you then need to consider the impact the information will have- will it alarm people, will it make them more efficient, irritable, more comfortable, resentful, dafer, happier, bored, more productive, better informed, more motivated, more loyal? The impact that your communication will have on the productivity of your organization has to be a primary concern mostly if you are the bearer of bad news or your message is concerned with a change that will affect the working life of others. Think about the questions people will need answers to, ask yourself what you would feel if you were to hear this for the first time, decide just what you want your audience to do after you have communicated with them, think about the actions and changes that your communication will cause.

Then, you have to make your message of interest to the receiver. The more you can personalise your communication to fit with the needs and interests of your audience, the better that information will be received and acted upon. We have to list the information that is to be sent and then prioritize the points into categories such as:

must know, important to know, helps understanding, gives examples, nice to know, interesting but not important; this is important when communication is verbal since it is linear and it moves the whole time; the listener is required to take part in and remember all that was said. After organizing our thoughts we put them into words and images.They are based on our internal dictionaries, assumptions, experiences, education, mood. Clarifying the meaning comes next as sometimes words alone are not enough to get the meaning when we deal with complicated concepts or spatial information.

We think at least three times faster than we speak. It is easy to mishear, ignore or miss a great deal of information. So, written communication is easier to focus on because we can return again to parts that we need to consider carefully.

What impression do you try to give to the people you deal with in business?

* pleasant, sincere, efficient, confident, calm, honest, skilful, intelligent, nice , polite.

* Unfriendly, shy, aggressive, sleepy, unclear, lazy, dishonest, clumsy, stupid, inefficient, nasty, unhelpful, off hand, rude.

Asking questions is something people have to do a lot in business.

Decide what the questions are that led to each of these answers :

1.Yes, thanks I had a very good flight.

2.I'd like to see Mr. Barry if he's in the office.

3.On my last visit I spoke to Mrs. Helen.

4.It was Mr. Weber who recommended this hotel to me.

5.I think I'd like to see round the factory after lunch.

6.No, my husband is traveling with me. I'm meeting him later

7.We'll probably be staying till Friday morning.

8.No, this is his first visit; he has never been here before.

a.Did you have a good flight?

b.Who would you like to see?

c.Who did you speak to last time you came?

d.Who recommended this particular hotel to you?

e.When would you like to see round the factory?

f.Are you traveling alone?

g.How long are you planning to stay?

h.Has he been here before?

Imagine you're having dinner with Mr. Johnson who is visiting your country for the first time.

Write down ten questions beginning like this:

* Are...?/Is...?

* Do...?/Does...?/ Did...?

* Have...?/Has...?

* Who..?/When...?/Where...?

* What...?/ Why...?

* How many...?/How much...?/How long...?

What do you consider difficult and/or enjoyable about talking to:

* Someone you've never met before?

* A superior or someone who could influence your future career?

* Someone who is considerably older than you?

* A foreigner?

* A member of the public?

* What experience did you have with a public person?

* What does the meaning of a message depend on?

* How do you respond to change?

Principal Comunication Media

Written Oral/Aural

Internal External









Handbooks Letters









Export documents

Promotion literature

Press releases




Booklets Face to face-encounters


Briefing sessions








Public address system


The Principal Communication Media

Visual/Physical Telecommunication/










Overhead projector Models

Conveyer belts


Courier services Telex

Tele text

Facsimile transmission

Electronic mail

Voice mail


View data

Wide area networks

Cellular radio/


Cable television

Satellite transmission


I start work at the same time every day.

I wake up only when the alarm clock strikes.

I go to work by car/ underground/ I walk

I work overtime and have very short breaks.

I am never late at work. I am always in time.

I do not complain about my work.

I like my job and my boss.

I hate cigarettes and coffee.

I share my office with a smoker who is...my husband.

I get a lot of important calls.

I attend meetings and I talk with people.

I ask questions and I give answers.

I take decisions, I negotiate.

I reach agreements, I create a climate of co-operation or expectation.

I work with money. I know that it bewitches people.

People fret for it, swear for it, devise most ingenious ways to get it and to get rid of it.

I work in the banking system/accountancy/management/trade/

I operate with consumer/ market/ current/ overhead/ top/ bottom/ ceiling(maximal) flat(unic)/floor(minimal)/closing(la inchiderea bursei de valori)/fair(convenabil)/ force account rate(de regie)/knock out(derizoriu)/ upset(initial, de pornire))/ price

I operate in a Stock Exchange with securities: marketable(usor realizabile/quoted/unquoted

I operate with : bearer bond-(obligatiune la purtator)/irredeemable bond (neamortizabila)./registered bond-(nominativa)/junk bond-(riscanta, cu evaluare de credit scazut).

I operate with shares: preference/ ordinary/deferred/forteited/ in trust.

I do market research and I check the mercurial(fluctuanta)/ sluggish(activa)/ sagging(in scadere)/steady(stabila)market.

I direct the sales for future delivery(vanzare la termen)

I talk about costs: flat(uniform)overheads(indirect)sunk(investit)capital(de investitie).

I chair meetings and take the floor.

I order a cake as I like to eat sweets.

I go home late in the evening, very tired.

I have supper and I eat some fruit.

I listen to the news on TV.

I go to bed and I have nice dreams.

I relax on weekends: I go shopping, I watch TV, I go to picnic, I breathe fresh air, I chat with my friends, I rest in the countryside, I get away from the noisy and dusty town, I listen to music, I cook, I read the latest books, I meet my friends, I drive my car.

Are you in control of your life?

I am keen on my job, enthusiastic, bursting with energy, confident with myself. I love new challenges, I analyze problems methodically, I am an objective thinker, I am friendly, highly trained, well informed, generous, easy going, polite,

Sometimes I am boastful, uncertain, embarrassed, moody, annoyed, bored, lacking confidence, reluctant, incomprehensible

I often feel that I am at the mercy of outside forces beyond my control.

I often feel that life is passing me by.

When people praise my work I believe that usually they really mean it.

I have at least one habit that I can't break.

I think it's a waste of time planning ahead because something always turns up which makes me change my plans.

I often dream about work problems.

I have at least three important leisure interests or hobbies that have nothing to do with my work.

I often refuse my friend's invitations because I have too much work to do.

When I read newspapers my mind keeps wandering back to work problems.

I enjoy meeting new people.

I like to be successful in my job

I want to know as much as possible about customers.

I never believe only in luck.

I don't like outdated and inefficient things.

I admire smart people

I enjoy discussions and to hear other people's opinions.

I find it easy to choose rich colour combinations in clothes, furniture,(yellow-happiness, fulfillment, positive thoughts, creativity, orange-positive energy, well being, blue-infinite power, balance, wisdom, red-courage, determination, energy, ..

I make important decisions based on what looks best to me, on my feeling and intuition. I think of myself as someone who dresses sensibly, neatly, tidily.

I like to share attitudes and values with my partner.

I like to meet the highest demands and standards.

I consider signs important in life:nr.1.-creative power, unity, nr.2-balance,nr.3-the Trinity,nr.4-order, nr.5-the figure of man, nr. 6- universal harmony, nr.7-cosmic order, nr.8-the initiated one,nr.9- eternity...

What are your weaknesses ?

I am inexperienced, too enthusiastic. Not very confident in using the computers, shy, not a very good communicator.

Sometimes I have no direction in life, I feel like getting lost.

Do you agree or disagree?

1. whatever reason people have for living together, it is a private matter.

2. couples need support of other families, of society.

3. young passions die and interests change.

4. rooms reflect our personalities and colours too.

5. man is confronted with possibilities or alternatives on the basis of which he can project his life.

6. we are left with the freedom of choice as long as we consider experience never limited and never complete.

7. we will always search for temporary solutions, we will always move away from the values and authority of the older generations.

8. relationships will always remain incomplete even if with wonderful moments.

9. we create versions of reality out of our desires and when they clash with the external world they disappoint us.

10. we become complete when we assume the responsibility for our own lives.

11. if we fail to look into ourselves we remain fragments, unsatisfied, incomplete, empty.

12. never look into the past in order to find out how to live in the present but always make the effort to find a new direction in life.

13. some of us fill the gap in our life by the help of traditional values and yearn for the stability and security of marriage, others respond only emotionally being "prisoners" of impulses, following a logic of the soul.

14. if given a solution, we face reality and act6 creatively in terms of our own powers and we answer the most important questions in life.

15. sometimes we live out an illusion all our life and realize that the workings of fate are enigmatic. We get strength when we cooperate with it as we live in an universe of oppositions where the vertical has to return to the horizontal.

16. sometimes human suffering is far from remedy and we find the ordering of existence meaningless so that we come to doubt our own doubts.

17. sometimes we are too intellectualized and the intellect threatens and stifles the life of feelings and emotions.

18. the awareness of our divided nature has constantly unsettled us. Despite such a divided nature, we still manage to preserve our balance.

19. our attempts range from the ridiculous to the sublime to cross even if only in dreams, the boundaries of existence.

20. even if our illusions are swept away, we prefer life's restlessness.

The Interview

Fashions seem to change quite rapidly in interview techniques and the only rules that applicants should be aware of may be "expect the unexpected" and "be yourself".

In different countries, different trades and different grades, the salary that goes with a job may be only part of the package: perks like a company car or cheap housing loans, bonuses paid, company pension schemes, generous holidays, flexible working hours may contribute to the attractiveness of a job.

Everybody has to go through interviews to be offered a position. Recruiting a new member of your staff is likely to be the most expensive decision you will make as a manager. If you do it right you can make a fortune for your company. Most managers inherit a team of workers who know what they are supposed to do, who know something about your company, about the way your team works, about your customers, about the business processes within the department.

What happens when you bring an outsider in to this situation? Some of the possible outcomes if you do it wrong are:

-you and your staff spend ages helping the new team member to get started.

-Your team norms are threatened and possibly changed.

-You discover that the perfect qualifications on the new employee's C.V are no more than hype.

- You discover that the new employee is not fit for what you want.

So, the recruitment process has to take into consideration the following:

a) job advertisement

b) C.V

c) The interview

Both parties the interviewer and the interviewee have to communicate effectively: open questions, right answers, positive opinions.

A job appraisal interview is one of the major tasks of the leader of a team of people. It enables to: plan the future, look at individual performance, discuss and plan training and development needs, contribute to company career planning, salary planning and job progression, evaluate the efficiency of past targets and goals, establish priorities, identify, assess, solve problems, look at resourceful needs.

Job appraisal needs to be systematic if it is to be of any use. All effective managers have day to day or week to week contact with their team, they will also be running up dating sessions where they inform the team of corporate, market or local changes in working, policy or law and any changes that affect the workings of their teams. These are day to day tasks of management. The job appraisal interview is an opportunity for the team member and their manager to think about the future months in an organized manner. Before an appraisal they both have the opportunity to think in depth about what they have been doing and where this will lead in the future, where the success and shortfalls are, and what objectives they will set each other in the future.

Applying good communication practices to the appraisal process will ensure that career progression has the best chance of success from the point of view of both parties.

Interviews really aren't out to trap people. They evaluate people, they know how to assess your qualities.

Characteristics to have a successful interview :

* Be neat and well groomed.

* Be natural, friendly, relaxed but not sloppy or overly casual.

* Be interested in the work involved in the job.

* Have definite vocational goals.

* Articulate the goals you have in mind.

Attention to:

1.What to wear! Inappropriate clothing or being late can cost you the job.

2.What to bring to the interview! Select those items from your background that demonstrate what employers look for.

3.How to act. Sit straight, don't mumble, look at people when you talk, don't smoke.

Parts of an Interview

I. The Opening (2-5')

The interviewers will set you at ease. They will open with easy questions about your major interests or by telling you about the job of the company.

II. The Body (10- 20')

You should expect questions that give you the opportunity to show your strong points and of course to raise questions.

III. The Close (2- 5')

The interviewer will tell you what happens next.

Possible Interview Questions:

1.Tell me something about yourself.

2.Why do you want to work for us? -state your qualification -state things that separate you from other applicants

3.Did you have any accomplishments? -pick up one or two which you are proud of.

4.What is your class rank? What University did you graduate?

5.Where do you see yourself in 5 years?

6.What would you see as the ideal job for you?

7.What do you know about our company?

8.What are your interests outside work?

9.What are your strengths and weaknesses/ shortcomings ?

10.When did you last lose your temper?

11.What is the best idea you have had lately?

12.What is your worst fault and what is your best quality?

13.How long do you think you would stay with us if you were appointed?

14.What makes you think you'd enjoy working for us?

15.Why are people unlucky or unsuccessful in getting jobs?

16.If you were me what other questions would you ask?

Attention: -Don't focus on salary. -Draw the attention that you'll work hard with loyalty.

* Why are people unlucky or unsuccessful in getting jobs?

Imagine that a friend of yours is about to attend an interview. Write at least ten pieces of advice that you would give him. You have as suggestions:

. Wear smart, formal clothes

2. Don't smoke

3. Sit up straight

4. Arrive on time

* Find out about your partner's career.

Ask about:

-present job

-work experience

-education and training

-ambitions and prospects for the future

-its rewards and frustrations

* Discuss how the impression you may give especially to a foreign can be affected by:

a) Your expression ( smiling, blinking, frowning, looking down, looking straight in someone's eyes...)

b) The noises you make ( sighs, yawns, knocking loudly or softly at a door, clicking a ballpoint pen.... )

c) Body contact ( shaking hands, touching...)

d) Body language ( crossing your arms, sitting up straight )

e) Clothes and appearance ( hair, make up, suit, tie )

f) What you talk about ( politics, business, sport, family )

g) Your tone of voice (sounding cool, friendly, familiar, serious )

* Find out about your partner's career.

Ask about:

. Present - its rewards and frustrations

2. Work experience

3. Education and training

4. Ambitions and prospects for the future

* Employees are often given a "progress interview" some months into a new job, so that they get feedback on their performance so far. Participants on training courses often take part in similar mid-course interviews too. Make a list of ten questions that might be asked at such an interview in your firm. Here are some examples:

? What have been your most valuable experiences with us so far?

? Which parts of the course have been least valuable to you?

? What particular difficulties have you had?

? How will do you get on with the other members of the staff?

? Try this quiz with a partner.

1.Which is the best definition of good conversationalist?

a.Someone who always has plenty to say.

b.Someone who has plenty of amusing stories to tell.

c.Someone who will listen carefully to what you have to say.

d.None of them ( give your own definition. )

2. If someone just says "what?" after you've carefully explained something, do you ...

a.Go through the explanation again using different words?

b.Feel that you have been wasting your time?

c.Feel that you have not been believed?

d.None of these.

3. If someone always looks you straight in the eye this means that he is:




d.Trying to frighten you

4. If someone shakes your hand very hard and long, it means:

a.He is very pleased to see you.

b.He is trying to show you that he is sincere.

c.He is waiting for you to say something

d.He is reliable and friendly.

5. If a man wearing jeans and no tie comes into your office, do you think he:

a.Isn't correctly dressed?

b.Can't be important?

c.Is quite normal?

d.Is someone who has come to fix the electricity or something?

6. If you are meeting an Arab client it is polite to:

a.Get straight down to business.

b.Wait until he raises the topic of business.

c.Stick to small talk for the first few minutes.

d.Ask him to close the door of his office to prevent interruptions.

7. If someone smiles while you're explaining something, this means he is:

a.Not sincere.


c.Not listening.


Managing our Time

Are you a busy person?

Are you crowded by events?

Do you make your life manageable?

Well, time may be infinite, but each of us has a finite allocation: time is something you can't increase or decrease. As far as, no matter how clever you are, how wealthy, how industrious, you still get 24 hours every day. What you need to do is to carefully manage the time you have got putting it to the best use possible.

Before you can save time you have to spend some. You have to understand time management and make a little effort to do things like: plan, organize, review, rearrange, sort, think.

Can you invest time in time management?

Well, most of the words commonly used about time are money orientated: buying, losing, saving, spending, wasting time. Time becomes important because you can use it to make money but...no amount of money can buy you one extra second of time; time becomes more valuable the less of it we have: it is like most commodities.

Good time management can:

• give you more time to do what you want

• improve your availability

• improve your decision making

• improve your health

• improve your productivity, efficiency, effectiveness

• make you easier to live with

• make you easier to work with

• make you feel more relaxed

• minimize the risks you take

• reduce stress

Good time management is about setting limits for:

*availability (how willing you are to be disturbed, to make yourself available)

*duration (how long you spend doing things)

*importance (how you prioritize things)

*involvement (how much you do yourself as opposed to delegate to others)

*standards (how well you do things)

*urgency (how quickly you do things)

Why are interruptions urgent?( when the phone rings or on there is someone at the door)

Do you treat all work for a particular person as important?

Do you check how important something is when you receive work?

Do you limit your involvement in things?

If we aren't perfectionists what standards do we set?

Is it important to give priority to things that are non urgent?

Do you agree with the following statement? : "you need to spend your time on actually doing things, not being busy."

! So, you can spend time doing the right things, doing what you like doing, doing what you're good at, achieving things not just being busy.

! Then, setting goals is something that we must do because they increase our motivation, raise our self confidence, help us achieve more, improves our performance, increase our satisfaction, improve our concentration.

Which would you choose?

• creative (decorate your house, landscape your garden, write a book....)

• career ( become a manager, gain a pay rise, work part time...)

• educational (gain an extra qualification, learn a language, read more..)

• family (get married, spend more time with the family, visit your relatives more often...)

• financial (save at least 100$ every month, reduce mortgage payments, repay debts and credit cards...)

• mental (accept your faults, be more sociable, control your temper more, stop criticizing..)

• physical (cut down on junk food, lose weight, reduce tea and coffee, stop smoking...

• social ( have friends round once a month, read more, start a hobby, take a long weekend twice a year and go away..)

Discussion points:

1. Consider your personal goals and make a list of these. Do any of them conflict with your work goals? If so, which is the most important to you?

2. Are you aware of your own limits? Which are they?

3. Do you set unnecessary high standards, do you aim for perfection?

4. Where do you belong to: the optimist, the perfectionist, the rebel, the socialite(important persons) , the worrier? Do you agree with the following:

- being too optimistic is being unrealistic

- optimists are good starters of work but poor finishers.

- perfectionists often take so long to do something that its value is reduced; they set impossibly high standards and then set about achieving them.

- rebels set their own deadlines with no reference to others; relish(enjoy) crises and problems as they can overcome these to show how much in control they really are; they are good finishers but poor starters of work.

- socialites like to be involved with people; they like to talk, to gather information.

- the worriers never seem to develop confidence in their own ability; they may avoid certain types of work as they worry of not being able to do it.

The world would be a very simple place indeed if it were an easy matter to analyze what sort of person someone was, and to handle them accordingly. It would even be simpler if there were definite types of persons. But they aren't. In time management terms two types of people cause the majority of problems and they are at the two extremes: perfectionists and procrastinators. Both tend to achieve less in a longer time.

Perfectionism can be a good thing: society has long valued accuracy, attention to detail, low error rates. But it can actually interfere with your progress and work, to the overall detriment of your work. Trying to be perfect can stop you feeling satisfied and motivated.

Recognizing perfectionism:

• all or nothing thinking or black and white thinking. There is always one right answer if only you can find it.

• being afraid of disapproval

• being afraid to make mistakes

• being over sensitive to criticism and the opinions of others

• constantly looking for a mistake or slip up

• difficult personal relationships

• difficult keeping things in perspective

• equating failure with being worthless

• expecting too much of others

• feeling that what you achieve is never enough

• living life with a set of rules: a life full of "shoulds" and "mustn'ts"

• never feeling satisfied with anything you have done

• putting off completing work to improve it or get it just right

• valuing yourself based on what others think of you

Working with perfectionists:

• ask them to help you set your goals so they can see how others motivate themselves and think

• be approachable, so they encouraged to admit mistakes and not cover them up

• be careful of rewarding over achievement

• check that they are progressing in the right direction; stop them focusing on quality at the expense of getting the job done

• discuss your own mistakes openly and constructively

• encourage them to set goals based on past performance not their best hopes

• help them set goals and make sure they are realistic

• let them know what standard is required

• never laugh at them for lack of success or making mistakes

• openly discuss priorities

Procrastination (postponement) is like perfectionism- it's faulty thinking and feelings; you are being dishonest to yourself when you say lies such as "I'll do it after this cup of coffee" and you know that you won't.

Recognizing procrastination:

• accepting low standards

• being easily distracted

• dawdling

• getting side tracked

• ignoring things in the hope they will go away

• "just one minute' syndrome"

• low priority tasks get in the way of high priority ones

• putting things off until later

• underestimating the effort or time needed to achieve a task

• waiting until you are in the mood

Working with procrastinators:

• compliment and encourage them when they do make progress

• don't let them get distracted

• don't laugh at their putting things off

• help them break down large tasks into phases or sub tasks

• monitor their progress and let them know they are being monitored

• reward them for progress

• set deadlines

Discussion points:

1. Can we understand the causes of perfectionism?/ procrastination?

2. Do you impose your high standards on others?

3. Do perfectionists lose track of the deadlines?

4. Look carefully through the signs of perfectionism. How many can you see in yourself? How can you work on this situation? What about procrastination?

5. What is the impact of fearing success, failure, the unknown? Can it become a cause of procrastination?

6. What do lack of information, of motivation entail?

7. How can you work on your weaknesses?

Little perfectionism can work wonders. But it isn't normal thinking; it is faulty thinking. Beliefs and feelings are inaccurate; appropriate working is far more valuable than perfectionism to any company.

The Job I Like

People have always worked. So they have had different occupations along centuries.

All professions require much training, learning and responsibility.

To get a job it's not enough to be good, but you must convince others that you are good.

You have to manage your own work easily, to be flexible in any situations, to come up with new ideas to inspire confidence, to have well established priorities, to be a good team player.

More and more people have part time jobs such as: babysitter, waiter/ waitress, shop assistant, paper boy, taxi driver .Among the advantages of part time jobs there might be:

? -the sense of financial independence

? -self reliance

? -getting to know other people

? -stronger links to real life

There are jobs in all the fields of human activity:

Industry :

o Worker

o Foreman

o Technician

o Engineer

o Economist

o Mechanic

o Computer operator


• Carpenter

• Potter

• House painter

• Blacksmith

• Glazier

• Locksmith

• Chimney sweeper

• Cooper

• Plumber

• Electrician

• Dustman

• Watchmaker

• Dressmaker / tailor

• Shoemaker

• Cobbler

• Hatter

• Receptionist

• Milliner

• Furrier

• Seamstress

• Barber

• Hairdresser

• Dyer

• Dry cleaner

• Waiter/ waitress

• Cook

• Typewriter

• Accountant

• Clerk

• Designer


? Judge

? Prosecutor

? Lawyer/ solicitor

? Notary

? Clerk of the court

Education and culture

? Writer

? Printer

? Publisher

? Bookseller

? Bookbinder

? Journalist

? Producer

? Playwright

? Stage manager

? Actor/ actress

? Painter

? Librarian

? Singer

? Dancer

? Musician

? Composer

? Conductor

? Sculptor

? Teacher

? Philosopher

? Linguist

? Critic

? Priest

? Cameraman


? Shop assistant

? Butcher

? Baker

? Greengrocer

? Salesman

? Grocer

? Confectioner/ pastry cook

Transport and telecommunication

? Driver

? Sailor

? Railway man

? Airman

? Postman

? Phone operator

? Telegraph operator

? Air hostess


? Architect

? Planer

? Bricklayer

? House painter

Agriculture and forestry

o Farmer

o Forester

o Agronomist

o Woodcutter

o Winegrower

o Fisherman


• Physician

• Surgeon

• Oculist

• Dentist

• Chemist

• Nurse

Other jobs

? Policeman

? Fireman

? Officer

? Soldier

? Custom officer

I. Answer the following questions:

1. Who are those making and repairing things?

2. Advantages and disadvantages of the teaching profession?

3. What does the medical profession require?

4. What do computer operators do?

5. Whom does the profession of arms include?

6. What could the ideal job be?

7. What qualities would somebody need for the following careers: police officer, politician, journalist?

8. Explain what a part time job means?

9. What are the qualities that business people look for when they want to employ someone?

10. What will you look for in your future career?

II. Find out the correct definition for:

a. Accountant

b. Civil engineer

c. Computer operator

d. Babysitter

e. Stevedore

f. Economist

1. An engineer involved in construction

2.An expert in economics

3.A person qualified to keep a company' accounts

4.A person who works in the docks loading and unloading goods

5.A person who translates information into a form computers can understand

6.A person paid to look after a baby

III. What careers are the following qualities needed for?

Determination Curiosity Skill

Patience Shrewdness Tenacity

Inventiveness Ability Courage

Faith Tolerance Perceptiveness

Self-denial Physical appearance Modesty

IV. Match the following columns containing interest jobs

1. scientific a. plumber

2. artistic b. nurse

3. practical c. accountant

4. welfare d. academician

5. computational e. novelist

V. What are the things you should do or shouldn't do if you want to get a job?

2) Find out as much as you can about your future job.

3) Sit down immediately when you enter the room.

4) Be careful about the clothes you wear.

5) Make sure where the interview is since you should always be on time.

6) Stress poor aspects of yourself.

7) Have a light meal before you go to the interview.

8) Have a drink; so you will pluck up courage.

9) Bring your school certificates or letters of introduction.

0) Smoke if you like.

1) Criticize your last boss.

VI. Describe your ideal boss:

• Strong/ weak personality

• Very ambitious

• Easily adapting

• Good organizer

• Modest

• Funny

• Well informed

• Efficient

What do you think of the following situations?

1. You don't like your boss.

2. You think your boss is rubbish.

3. The boss is picking on you personally.

4. Your boss is prejudiced against you.

5. Your boss seems to think you're permanently on call.

6. Your boss is having a tough time and is taking it out on you.

7. Your boss takes credit for your ideas.

8. Your boss blames you for their mistakes.

VII. How important are each of the following to you in providing you with job satisfaction?

? Challenge

? Meeting people through work

? Security

? The respect of colleagues

? Working conditions

? Status in your organization

? Learning something new

? Personal freedom

? Exercising power

? Helping other people

? Being promoted

? Making money

VIII. Advertisements for jobs vary considerably in style. There are advantages and disadvantages in using the dynamic style.

Imagine that you are interested in applying for a job. And you have come across the following advertisement. Read the advert and write two more.

Sdk International

Has an immediate career opportunity in your city:


Candidates should have excellent verbal communication; skills in both English and Romanian, strong personality and creativity and age should be under 30.

Please respond in English with your CV and Letter of Application to Sdk International Romania CP 129 OP 16 Bucharest

Read the advert and write two more.

IX. Write a Letter of Application having the following as model:

Dear Sir,

With reference to your advertisement in the Adevarul of October 23 I'd like to apply for the job

I' m 26 years old and I have graduated a course in Economics and Law.

Last summer I acquired some professional experience working in the accountancy department of an office automation equipment company.

I am fluent in English, German and French.

I am not married and I can work on weekends too.

I enclose a CV and hoping that I will suit your requirements I look foreword to hearing from you.


Adrian Voicu

X. A CV is essential if you are applying for a new job or for promotion; it usually accompanies a letter of application.




Date of Birth








Results obtained

Post school qualifications

Post graduate qualifications


Experience/ achievements


Published works


How Can you Manage Difficult People?

At work and in our leisure time we are often confronted by difficult people and awkward situations and they seem to come at us from every angle. How can we cope? People do not change easily.

What is a difficult person? In general they are people who demonstrate bad behavior, who don't care how their behavior affects others and who even use it to their advantage.

Being difficult is effective because it works but in the short term. Long term relationships need a greater complexity of behavior. Difficult people hope that due to their behavior we will either start to give priority to their wishes or that you will leave them alone.

Difficult people are not restricted to the workplace. Working relationships have few emotional ties and are more detached whereas within the home environment lurks a complex web of history and emotions.

When you deal with difficult people effective listening is very important; you must be able to tune in to what he/she is trying to tell you. A good listening means: to hear the message- genuinely listen to what is being said; to interpret the message- to take in all aspects of body language, tone of voice and interpret their significance; to evaluate the message; to respond to it.

It is not always the people that are difficult but sometimes it is the situation. Working relationships and environments bring together a whole host of situations for which you cannot always prepare. At some point in your career you will have to deal with difficult situations. They come up at the workplace. Difficult colleagues create added pressure.

Then, conflict can hardly be avoided. You also have to cope with difficult managers and with difficult staffs.

Difficult people and awkward situations are everywhere; therefore, running away is not really an option unless you want to live a hermit for the remainder of your days. So, a far better strategy is to learn to deal with such situations; this does not mean being weak or let everyone take advantage of you; it means having some firm strategies for dealing with people and situations.


-the ability to work with all people

-being known as a person who can get things done

-being seen as flexible and someone who can "deliver' whether that be projects or products.


- being restricted as to whom you can work with

- being seen as weak and ineffectual and being given a wide berth(mostly in times of promotion)

- being thought difficult yourself owing to your inability to work effectively with others.

Answer the following:

1. Where do you encounter difficult people most?

2. How can you achieve a responsible and effective working relationship?

3. Are difficult people at work fixed in your life?

4. Do you find that life will become easier each time you deal with a difficult situation?

5. Who are the people at the top?

6. Is it still possible to bully people into doing what they want?

7. What kind of people are the negativists?

8. How important is body language?

9. Do teams need to celebrate success?

10. How can you win people's respect and your own peace of mind?

11. How important is the environment when you deal with difficult people?

12. How important is timing in tackling a situation?

Action Points

1. Think of three things that you could do now to make you feel more confident about your ability to tackle the next difficult person or situation which comes along.

2. Make a list of all the people you have difficult working relationships with, then write one thing you like about them beside each name. Try at some point in future to complement them on that one thing- it will build bridges for the future.

3. Reflect on the last time you were criticized by a colleague. How would you handle that if the same thing happens again tomorrow? Are there lessons you have learnt?

4. Think of three people who have displayed difficult behavior in the last month. What did their difficult behavior have in common?

5. Have you ever seen anyone or been involved yourself in a bullying situation at work? What could you have done to help or done differently?

The Media

It is impossible to imagine a modern society functioning without the media which remains a powerful means of spreading news and information.

We want to get informed and the T.V., the press, the radio have turned out to be great transformers of minds or society.

•Answer the following questions.

I. Which of the media provides most of your:

a.) International information.

b.) National information.

c.) Local information

d.) Entertainment

II. If you had to rely on only one of the media, which would you choose ? Why?

III. You've heard about a local radio program in which ordinary people are interviewed about their lives and opinions. Each week there is a different theme e.g..

Fear "my most frightening experience"

Achievements "the proudest moment of my life"

Disasters "the worst holiday of my life"

Leisure "my hobby is so important to me"

Add possible themes for the next programs.

Do you classify the news when you listen to or watch it?

Do you prefer listening or watching the news?

IV. List the negative effects of T.V.

V. Mention some of your favourite T.V programs on T.V

You may refer to:


-soap operas





•Answer the following questions:

1. Is T.V. a great transformer of minds or society?

2. Do you remember much from a T.V. documentary?

3. Can you name some ideal subjects?

4. Do you think that a night's viewing is wonderfully forgettable?

5. Is T.V. harmful to children?

6. What effect does quantity of viewing have on people?

7. What is the most interesting documentary you have seen?

8. What do soap operas have all in common?

9. Are the news always interesting?

10. What topics do you prefer?

11. What happens when you watch a boring film?

12. Can you name some commercials that you liked most?

13. Do you watch politics?

14. Are you better informed after watching T.V.?

15. Do you consider that some subjects are out of place/

The Press

The newspaper remains a powerful means of spreading news and information.

The purpose of the press is to publish news and give information on politics, finance, economics, arts, theatre, science.

Apart from the ideological difference, there is also one in the way they are designed.

We read newspapers, magazines, revues, journals.

There are daily newspapers, weekly, monthly newspapers quality and popular newspapers.

The newspaper:






A newspaper article is based on:

1. a discussion

2. a description

3. a narrative or a combination of more than one of these.

The backbone of an article is:

a) headline/ heading opening

b) paragraphing

c) quoting

d) ending

Journalists aim at covering five W's and an H( who, what,when,where, why,how) about the event.

Newspaper columns express opinions. Writers contributing to them are famous and influential and they adopt their own style. They say that a column can be appreciated after reading it in order to understand the attitudes of its author.

Popular headlines frequently use slang and punning references to an article's content while quality newspapers tend to provide more information in their headlines. Both types of newspaper use common jargon words to save space.

Look at the headlines and chose the correct answer:

Day the jailbirds came out in sympathy

1. prisoners

a) were extremely co-operative

b) planned an escape from jail

c) supported a strike

d) were released from jail

Lazy' doc gets a rap

2. The doctor has been

a) Criticized

b) Sued

c) Fined

d) Dismissed

Shoplift slur on Doris, 72

3. An accusation of shoplifting has:

a) Made an elderly woman furious

b) Made an elderly woman confused

c) Damaged her reputation

d) Damaged her health

•Answer the following questions:

-Are you a great reader of periodical press?

-What sort of articles can a newspaper carry?

-What kind of newspapers do you know?

• Supply the suitable words:

A person -who sends news, articles, reports to a newspaper

- who looks through the manuscript of an article, corrects it, suggests, changes and prepares it for printing.

-sets up type for printing

-who buys a newspaper, a magazine regularly

-who is engaged in publishing, editing or working for a newspaper.


Whatever the T.V./ video industry might now say, television will never have the impact on civilization that the written word has had.

The book - this little hinged thing - is cheap, portable, unbreakable, can be stored indefinitely, can be written and manufactured by relatively unprivileged individuals or groups, dozens of different ones can be going at the same time, in the same room without a sound.


Advertising is the greatest art form of the 20th century. It may be described as a science of arresting human intelligence long enough to get money from it. It stimulates debate and sometimes controversy. It has a powerful effect on the human consciousness as it is around us on television, radio, cinemas, newspapers and magazines. The way we dress, talk and behave sends a message to other people. It is about manipulating public opinion and getting a message across to an audience so that they will behave in a particular way.

The advertising industry has been in existence since the end of the 17th century when newssheets carried printed advertisements for products and information. Merchants returning from voyages overseas needed to generate markets for the products they imported and so they had to advertise. By the end of the 19th century, advertising was big business. Advertisements dominated the newspapers, posters were commonplace and spawned a whole art form. But the new communication technology gave the industry its biggest boost. Modern advertising exploits every medium of communication. We tend to think of advertisements in terms of the mainstream media but we also have posters, billboards, point of sale displays, direct selling and cold calling by phone and fax, the internet which taps into worldwide audiences.

If you work in advertising , you will for sure be part of an influential band of people who can change public attitudes and behaviour.

The heart of this industry lies in the advertising agencies. The large ones are multinationals with in such far flung places as Beijing and Buenos Aires. If you work in a small agency, you may be expected to do everything, including account management, client liaison, concept development, creative work. In a larger one, job roles will be more structured. You will have a specific role and a greater chance of more formal career development. Advertising agencies vary in the services they offer. The most familiar names are full service agencies but there are also other companies that specialize in media services or focus on particular areas of advertising, such as recruitment or business to business advertising.

Business need to advertise so that we should learn of the existence of different products.

Advertising is aimed at conveying information to potential customers and clients.

Advertising is used to persuade the public to buy.

At the lowest level people need food, shelter, warmth and sex. Then, people begin to think about personal possessions and finally we move on to egocentricity.

The ultimate need is for fulfillment. This would come when we have all that the advertisers say we so desperately need. For most of us it seems that that day will never come!

Sometimes advertisements are misleading. Advertisers shouldn't make untrue statements about their products but they so often do it. They create a demand which would not otherwise exist.

Advertising goes far beyond T.V. and hoardings, newspapers and magazines, they enrich our lives.

• Answer the following questions:

? What are the arguments for and against modern advertising methods? Are there any controls which you think should be imposed on advertisers?

? Glamour and humour are two of the appeals which ads try to make for us. What other appeals do they make?

? In what other ways, apart from advertising are we persuaded to buy one product rather than another?

? How do national newspapers benefit from advertising?

? How can window dressing be seen as forms of advertising?

Arguments for advertising

? It tells consumers about the products that are available, allowing them to make a wider choice.

? It encourages competition between firms.

? By creating a wider market for products it makes large scale production and sales possible.

? Media would be more expensive without it.

Arguments against

? It is expensive.

? It can be wasteful, sometimes involving the same firm advertising virtually identical products against each other. (eg. washing powder )

? It can be misleading.

? It can exert control over media.

? It can put pressure upon people to buy products that they don't really need or can't afford.

Advertising media

? National newspapers

? Regional newspapers

? Consumer magazines

? Business and Professional Directories

? Press production costs

? Poster and Transport

? Cinema

? T.V, Radio

* Banners on Internet sites

Television commercials

? The most effective medium for reaching large numbers of people.

? They have to be brief.


? They cannot be very informative and display images rather than information.

? They are selective - it is hard to reach a particular group of people except for certain programs.


-advertising is cheap and can be effective in reaching certain types of people: old people and housewives.

National press

?- it is expensive too but if has a large geographical selectivity and allows detailed information to be given.

Magazines and trade press

It is a way of reaching a specialized group of customers.

There are magazines for almost any interest and for any type of product.

Posters and hoardings

-Effective if good locations can be found.

Sales promotions

-They include free gifts, competitions, give away samples, special offers.


-Of the arts, public works, sport can be very effective in putting a product or company name before the public.

Packaging and display

-In shops; they maintain existing sales but also encourage first time buyers.

?Here are some advertisements.

a. "when you can't say good bye!"

b. "from here to eternity"

c. "you know the name. It's the face you may not recognize"

Enlarge on them.

•Make an advertisement for:

a. a shampoo

b. a drink

c. a book

d. a restaurant

e. a sofa

? Write some adverts that promise:

? you'll feel happier

? you'll enjoy life more

? you'll have a nice holiday

? you'll be rich

? you'll be famous

? Make an advert as the one below:

Friendly, humourous boy 20, not very good looking but funny, seeks nice girl to go swimming, dancing, walking.

? Complete the following sentences using your own words:

? Advertising can help a business to .....................

? A good advertising agency will ........................

? Although newspapers and magazines ..................

? One of the weaknesses of human beings is that ......

? It is essential that the packing of a product should be .........

? This is the information about a job advertisement:

Asian Monetary Institute

Computer Programmer in the Statistics Division

The successful candidate will have

? A University degree in economics or statistics

? Work experience in banking and financial accounts

? Fluent English and Mandarin

Applicants should send a C.V., a recent photo and references from previous employers to the Asian Monetary Institute P.O. Box 6707

• Answer the following

1. What is Hello: a magazine or a newspaper?

2. Which country in the world spends the most on advertising: U.S.A or Japan?

3. Why is William Caxton famous: he produced the first printed advertisement in England or in U.S.A. ?

4. How did the earliest advertising take place?

5. Who invented paper?

6. How do we promote ourselves?

7. When did TV advertising come to Britain?

8. What is advertising industry entitled to do?

9. What is the difference between small and large advertising agencies?

10. What does modern advertising exploit?

11. What do advertising campaigns bring?

12. What is business to business advertising?

13. What does concept development refer to?

14. How important is timing in advertising?

15. Which are the advantages and disadvantages of advertisements on the internet?

Make an advertisement for:

1. Your Town and the Surroundings.

2. A Museum

3. A Car.

4. A Hypermarket

5. A Magazine

Enlarge upon the following:

" More than a watch. A dream that has come true!"

" It is not just a broken vase. It is the silence you feel when your shoppings are being protected with the credit card."

" They are the snapshots of a challenge, they are always with us!"


Managers spend a lot of time in meetings.

In fact they would argue "too much time" a meeting = the gathering of a group of people for a controlled discussion with a specific purpose.

1. People should call a meeting

a) When decisions require judging rather than calculation or expertise.

b) When pooling ideas improves the chances of good decisions.

c) If 'acceptance' of the decision is an important consideration for members.

d) To discuss multi-faced problems requiring different skills or specialists.

2. Essential elements of a meeting:

a) A purpose

- problem solving

- idea gathering

- training

b) An agenda

c) Members

-the chairman - presides the meeting.

-the secretary

-the other participants

d) A result (most resolutions are voted by a mere show of hands. For important decisions, the so called "constitutional majority" is necessary, amounting to two- thirds of the assembly.

e) A report, the minutes

Every meeting has an agenda. Whoever controls the agenda controls the meeting. If the agenda is not made public, the meeting may be hijacked by private agendas: the result will be confusion, frustration and failure. A written agenda allows everyone to focus on what they are to do: before, during and after the meeting. It acts as a plan of the meeting to aid preparation, an objective control of the meeting's progress, a measure of the meeting's success. The responsibility for setting the agenda is the Chair's. The agenda should follow a natural shape: the most difficult items will be placed in the middle third of the meeting, when the group's physical and mental alertness are at their peak. The easiest items can be put at the end. The agenda should also reflect the thinking process that we wish to follow as problem solving, evaluation of information and conflict resolution will need different approaches.

An agenda contains the following:

- title of meeting, date, time, venue, apologies for absence, minutes of previous meetings, matters arising from the previous meeting, other items to be discussed and decided, reports from subcommittees, contributions from guest speakers, any other business, date, time and venue of next meeting.

Minutes are considered: a reminder of what happened at the meeting, a basis for discussion of matters arising at the next meeting, a guide for non attendees, a permanent record. Taking minutes involves two skills: listening and note taking. In a society that communicates through visual images, listening has become a highly complex skill. Most people will be thinking and speaking at the same time and sometimes they will all be talking at once. Only a small proportion of the words we use carries the information we wish to communicate. Most people surround their thoughts with words which express feelings, attitudes to the listeners or their relationship to the group.

You cannot listen and take notes at the same time; your primary task is to understand what is going on: most of your time in a meeting should be spent listening. You should take notes only intermittently. The trick is to be able to note down only keywords but you have to be attentive to record information properly.

The minutes have to be written as soon as possible after the meeting and they should follow the agenda exactly.

Opening a meeting

• Good morning ladies and gentlemen

• If we are all here

-shall we start

-make a start

-let's start

-I think we should start

• First of all I'd like to introduce

let me introduce

two colleagues from our Munich office

Would you like to say a few words about yourselves?

•Right, thank you.

•Have you all got a copy of the agenda?

•If everyone has got a copy of the agenda, let me first explain the purpose of the meeting.

•The purpose / aim / target of the meeting is to ...

•Now; let's look at the agenda in detail.

•As you can there are 5 main points / items.

•I suggested that we take them in the following order.

•As we have a lot to get through this morning, can we agree on ground rules?

•I suggest the following ......

Moving to the first point

Handing over to another person

Bringing people in ( encouraging hesitant speakers ) "would you like to add anything?"

Stopping people talking

? One at a time please!

? We can't speak at once. John first, then Mary.

? Would you mind addressing your remarks to the chair?

? Could we have some other opinions?

? I think that's clear now. We've all got the point. Shall we move on?

If you didn't hear you can say:

• I'm sorry. Would you mind repeating?

If you didn't understand you can say:

• I'm sorry. I don't quite follow you. Could you go over that again?

If you feel the speaker is being vague or imprecise you can say:

• What exactly do you mean by?

Preventing irrelevance

•I'm afraid that's outside the scope of this meeting.

• We lose sight of the main point.

• Keep to the point.

• I think we'd better leave that subject for another meeting.

Keeping on eye on the time

• We're running short of time.

• There's not much time left

• Could you please be brief?

Moving to the next point

• Let's move on to the next point!

• Would like to introduce the next point?

• Well, I think that covers everything on that point.

Let's move on!.

Controlling decision-making

• I'd like to propose that...

• I'd like to propose the following amendment.

• Can we take a vote on that proposal?

• All those in favour. Right?

• All those against. Right?

• Well then we agree / with some reservations.

• Well then we agree / unanimously.

• Well it seems that we are broadly in agreement that...

Indicating follow up tasks.

• Do you think you could...?

• How about preparing some figures for the next meetings?


• I'd like to thank Mr. X & Y for coming over from Paris

Participating in a Meeting

1.Getting the chair's attention.

• I'd like to comment on that.

• May I have the floor for a moment?

2. Asking for and giving opinions.

• I'm convinced that / sure / positive.

• I strongly believe that ...

• I have absolutely no doubt.

• I definitely think that ....

• I really do think that ...

• To my mind ...

• As I see it ...

• From my point of view ...

• Am I right in thinking that ...

• Would I be right ...

• Don't you think that ...

• Are you absolutely sure / convinced / that ...

Sample sentences

• In my opinion we shouldn't rush into a long term agreement before considering the implications.

• I tend to think that the loss of key personnel has damaged their confidence.

• Do you think that national advertising is the right way to launch our products?

3. Agreeing and disagreeing

• I totally / agree with you / accept fully.

• I'm in total agreement.

• I'm in favour of that.

• Up to a point.

• To a certain extend.

• You may / could / be right but ...

• That may be so, but ...

• I can't / agree / accept.

• I don't /agree / accept.

• I can't go along with ...

Sample sentences:

• I have talked to the foremen and they completely agree with the idea to set up a quality circle.

• We are in agreement over the payment terms.

• I agree with Peter to a certain extend but I still feel that we are exposing ourselves to unnecessary risks.

• I'm afraid we can't agree to the terms in your latest offer. Please reconsider them and get back to us.

• A productivity bonus for the workers? I totally disagree with that type of incentive.

4. Advising and suggesting

• Shall we get started?

• Why don't we move to the next point?

• Let's postpone this till...

• I suggest we close the meeting.

• We should meet again next ...

• Why don't you present it at the next meeting?

• How about ...

• I would recommend ...

• It's advisable to ...

• He suggested that we analyze the threats and opportunities.

Sample sentences

• I don't think we've got enough for all the points in the agreements.

• Why don't we discuss point 4 at the next meeting?

• First you should do an audit of your present operations!

• The consultant suggested that we should focus on the threats to our business.

5. Requesting information and action.

• Can / could you tell me ...

• Will / would ...

• I'd like to ...

• Do you happen to know ...

• I wonder if you could tell me ...

16. Write a complete report having the following as a model.


Meeting held on 15 October 2000.

Location: Danavian Insurance Company, Stockholm

Present: Ulf Edberg (Treasurer, Denavian) self

Agenda: Letter of Credit Facility.

Client is not yet sure about company requirements for 2000.

Expressed worry, however, over the increase in our commissions and estimates that this will cost Denavian three times as much as before.

Client pointed out that the counter value of SEK 800 million is deposited with us. Currently pays 0.24% for outstanding volume of standby letters of credit but changes will mean paying 0.75% flat on this amount. Requested that we look into the possibility of setting up a trust found with Denavian's securities. Volume of letters of credit likely to fall quite heavily because of increased charges. I promised to investigate the possibilities of setting up a trust fund and to contact the client early next month with our outline proposals.

What do you think about the following:

1. "Training and experience go hand in hand if we want to reach a high level of responsibility in our career."

2. "Managers spend too much of their time in meetings and they may be sometimes too confident".

3. "Don't learn from books but from practice and make things happen"!

4. "Team work and the know how offers you stability".

5. " Everybody has to be aware that competition makes us tougher and more resourceful."


Originally it was a physical place where buyers and sellers gathered to exchange goods and services.

To an economist, a market describes all the buyers and sellers who transact over some goods or services.

A market is:

-the set of all actual and potential buyers of a product

-the set of buyers and an industry in the set of sellers.

1) Potential market - the set of consumers who profess some level of interest in a particular product or service.

2) Available market - the set of customers who have interest, income and access to a particular product or service.

3) Served market - the part of the qualified available market the company decide to pursue. The company may decide to concentrate its marketing and distribution efforts on Central and Eastern Europe.

4) Penetrated market - the set of consumers who have already bought the goods.

If a company is not satisfied with current sales it can consider a number of actions. It can try to attract a larger percentage of buyers from its served market.

It can expand to other available markets.

It can lower its price to expand the size of the available market.

It can try to expand the potential market by increasing its advertising.


It is a creative management function which promotes business and employment by assessing needs of the end user of products or services, initiates research and development and produces products or services which can be profitably provided to service market requirements. It coordinates the resources of production and distribution of goods and services, determines and directs the nature and scale of the total effort required to sell profitably the maximum production to the ultimate user.

This is the process of:



-satisfying consumer demand for a company's products.

Marketing a product involves:

-anticipating changes in demand

-promotion of the product

-ensuring that its quality, availability and price meet the

needs of the market

-providing after sales service.

Marketing can be split into four components:





Marketing and selling influence and control almost every part of a company's activities.

Marketing is customer rather than product focused. That means understanding how everything about your product or service impinges on the customer. It is not just the product itself that counts, but the way in which it is presented, delivered, repaired, replaced. Marketing touches on many areas of product management; the marketing department will be involved from the very beginning of a product's life in determining its image, deciding when, where and how it should be launched and monitoring its success in the marketplace.

Market research is based on the idea that if you find the customers' needs and wants and then use the information to provide a package that meets these, then you will be no doubt successful. There are two main types of research: desk (local library) and field research (phone research, written questionnaires, street interviewing, face to face interview, product tests, consumer panels, focus groups).

Marketing offers a range of career opportunities at different levels for people who are interested in making things sell. In a large organization, the marketing function will work in tandem with other functions, such as buying, logistics, distribution, retailing. If this is the chosen field, then you will be working at the heart of your company and will gain valuable experience.

Marketing staff may work on re-branding a product if it starts to loose popularity or launching the product into new markets overseas.

All kinds of products and services are actively marketed these days, even public services and monopolies.

Think of eight products ( goods and services ) that are produced or provided in your city or region and answer the following questions:

• What competition does each product face?

• What is the image of each product?

• What is the image of the company that produces it?

?Fill in the gaps using the words from the list:

profitable,. price, promotion, need, image, design, place, product, creative process, satisfy.

1. What is marketing? Marketing is the ..........satisfying customer needs......

2.What is 'the marketing mix'? It consist of 'the four P's': providing the customer with the right P .... at the right P ....... presented in the most attractive way ( P.....) and available in the easiest way ( P......).

3. What is a product? It is something customers buy to...... a ........ they feel they have. The ....... and the ...... of the product are as important as it's specification.

• How strongly or weakly is each of the products marketed?

• Where is each product advertised?


a. A brand of beer or soft drink.

b. A grocery product.

c. An industrial product.

d. A service

e. A place of entertainment

f. A public service

g. An educational service

h. A financial service

• What sort of questions are most useful in a sales meeting?

• What answer is each of these questions likely to provide/

• Which of the questions are likely to give more useful information?

Give your own examples.

#In marketing a product we should:

• analyze statistics

• conduct market research

• devise a questionnaire

• carry out a market survey

• consider the strengths and weaknesses

• devise a marketing strategy

•draft an advertisement

? Comment on the advertisements

•Iceland as nature intended

•Sweden refreshing

•Malawi the warm heart of Africa

# Make a list of five or more regions or countries that are in competition with yours.

Design a questionnaire to find out about people's attitudes to your region and to its competitors.

The people you ask should rate each destination for its qualities on a scale 1 to 10:

Good value for money

Good entertainment



Easy to get to

Health and sport


Beautiful scenery

Peace and quiet


Ask them to describe each place in one sentence like this:

"When I think of Sweden I think of cold winds and a flat landscape"

#The promotion of a product involves considering it as a "total product"; its brand name, presentation, labeling, packaging, instructions, reliability, after sales service.

Promoting a product involves developing a "Unique Selling Proposition" ( USP ): the features and benefits which make it unlike any of the competing products.

There are 4 stages in promoting a product (AIDA):

a) Attract the Attention of potential customers.

b) Arouse Interest in the product.

c) Create a Desire for its benefits.

d) Encourage customers to take good Action.

# Did you know that:

1) The world's largest advertising agency is British Saatchi& Saatchi.

2) The world's greatest consumers of coffee are the Swedes. (8 kg per person per year).

3) The world's largest employer is Indian National Railways with 2 million employees.

4) 99% of all business is Japan and Switzerland employ an average of 15 people.

5) The world's biggest manufactures of motor vehicles is Japan.

6) Over $1 billion a year is spent on advertising in the USA and the rest of the world is over $1.5 billion.

7) The world's largest airport is Jeddah (by area) or Chicago (by number of passengers)

8) Most Japanese companies pay professional trouble- makers not to cause trouble at their shareholders' meetings otherwise the meeting is sure to be disrupted.

9) The airport that handles the second largest number of international passengers in the world is Gatwick. Number one is Heathrow.

10) The average person over 15 smokes, 1,750 cigarettes annually.

11) The world's number one exporting country is Germany.

12) The world's biggest restaurant chain McDonald's serves about 15 million hamburgers a day at its 9000 restaurants.

13) The world's largest food company is Nestle.

14) The world's greatest and busiest port is Rotterdam.

15) The world's greatest beer drinkers are the Germans.

# how would you deal with Mr. Call. as - he keeps raising objections to your products: he say they are too expensive, that he's worried about your after sales service, that your new technology may not be reliable, that your design may not appeal to his customers.

# What would you do if you worked in marketing for "Dentallo".

Dentallo is a medium size firm marketing toothpaste and toothbrushes. Your Dazzle toothpaste and Protect toothbrushes are market leaders in the domestic market, but due to heavy competition from multinational companies with big advertising budgets you are no longer able to reach your export sales targets. Market research shows that a large proportion of consumers aboard find your product image is old fashioned and dull though your prices are lower than the competition.


People travel abroad on business or for pleasure by road, by air and by sea.

They travel at their own expense or at the firms' expense, they arrange accommodation, they make travel arrangements, they even find out the "romance" of travel.

Travel is a solitary enterprise: to see, to examine, to assess.

Travelling on your own can be very lonely so even if we crave for a little risk, some danger, an experience we should have companions.

• What are the advantages / disadvantages / of travelling:


-with a companion

-in a group with a guide?

• Can travel broaden the mind? How?

• Advantages and disadvantages of travelling on business.

• Speak about your experiences and feelings about:

-staying in a hotel

-driving a car abroad

-traveling by train

-visiting new places

-leaving out of a suitcase

-eating in restaurants abroad

-weekends away from home

-waiting for a delayed flight

• Which are enjoyable, exciting?

• Which are stressful, annoying, depressing?

• What difference does it make if you're on holiday and not traveling on business.

• Do you agree or disagree?

-take hand luggage not large suitcases.

-it's essential to organize everything before you travel.

-you should take a walkman and plenty of reading matter.

-learn as much as you can about the customs of the people.

-it's important to arrive a day earlier to give yourself time to adjust and acclimatize.

-be careful about local food and drink.

-don't get involved in a political discussion.

-treat everyone you meet with respect.

-"never forget that you're a foreigner"

Add some more pieces of advice.

• How many of these tips for travelers are worth following?

-never get to the airport too early in case the plane is late.

-always take a good long book to read on a journey.

-always try to get some sleep on the plane.

-never take more than one suitcase on a journey.

-always try to do some work on the plane.

-never drink alcohol on a plane.

-you can avoid losing any important document by keeping it in your hand luggage.

-you can save money on a hotel accommodation by getting rooms at a discount through your travel agent.

-you can avoid delays by taking carry on luggage onto a plane.

-always have some water with you.

• You may depend on a travel agent or your firm's travel department to make your travel arrangements but there may be times when you want to change an itinerary for a visitor or yourself.

Some phrases you might need to use:

? I want to fly to Miami on the 10 of the next month, returning on the 20.

? I'd like to reserve a seat on Flight number ...

? I'd like to change my reservation on Flight no..

? I need to get to the airport / railway station / as quickly as possible.

? One coach class / round trip / one way to Huston.

? One first class / club class / tourist class return / single.

? Is it too late to check in for flight nr. E009?

? Which platform / track / gate does the 13: 40 to London leave from?

? Can you tell me what time flight nr. ... is due to arrive / depart/ ?

• Who would you speak to in each case to get the information you require? What would you say?

-You have heard that flight BZ 431 is delayed.

-You want a rail ticket to Manchester.

-You want a plane ticket to Paris.

-You are in hurry to get to the airport.

-You have arrived at the airport three hours before your flight.

-You have three minutes before your train leaves.

-You want to make sure of a hotel room in Madrid before your flight departs.

• Do you know:

-where a visitor could go on a free day or at the weekend?

-when the museums are open?

-how a visitor can get tickets for a show?

-which restaurant to go?

-where a visitor can buy local specialities to take home?

• Imagine you'll welcome two people from the other side of the world who haven't left their own country before. They're coming to work with you for a few months.

Make a list of customs and habits that will seem strange to them and which will be different from their country. What will you explain them about:


-public transport






• Where can you find accommodation:

-in comfortable chalets/villas/?

-private houses / bungalows /?


-holiday camps?

• What kind of hotel do you prefer to stay in on a business trip?

• What facilities do you know? Chose those you are interested in:

-buffet style breakfast

-fitness centre /gym/

-jacuzzi &sauna

-secretarial service

-video movies /T.V. /

-restaurant serving local specialities

-cocktail lounge

-free car parking


-self service cafeteria

-24 hour coffee shop

-room service

-swimming pool


-golf course


Travel and hotels have always been closely related.

We place hotels in four groups:

? Commercial hotels providing services mainly for transients. Most of them traveling on business.

? Resort hotels located in vacation areas providing recreational facilities of their own.

? Conventions hotels which service conventions meetings usually held yearly of business or professional groups.

? Resident hotels where people can rent accommodations on a seasonal basis or even permanently.

Each hotel has got:

-a large lounge furnished with settees and chairs.

-a lobby with the reception desk.

-a service bureau.

-information desk.

-foreign exchange desk.

-waiting room with new stands.

-post office desk.

-souvenirs shop.




-modern convenience.

• The hotel staff include:


-assistant manager

-night auditor


-desk clerk

-reception clerk







-waiter /waitress


-wine steward


• What sort of rooms can you book in a hotel.




-rooms with bath /shower

-room looking out to ...

• What modern convenience can you have in a hotel?

-central heating

-laundry service

-air conditioning


• Name some of the do's and don'ts of the hotels. Start with:

-when going out you should not forget to leave the keys at the desk.

-you must pay the bill before leaving the hotel.

-rooms must be vacant by 12 am on the day of departure.

-you are requested not to disturb other people's rest.

-complaints should be made to Reception or to the manager.

• Describe a hotel that you liked most.

Travelling by Train

Railways today still carry the bulk of passenger and goods traffic.

It is one of the cheapest ways of transporting freight over long distances.

The railway station is provided with:

? A waiting room

? An inquire office

? Parcels office (heavy luggage is registered and labeled)

? Left luggage office

? Book stalls

? Post office

? Telephone booth

? Booking office

? Catering facilities ( restaurant, snack bar, coffee room, tea room..)

? Time table

? Shop

The passengers hurry along the platforms getting on or off the train; the porters carry the luggage to the train or push it on their trucks to the luggage van.

The luggage van is placed behind the engine, then the mail van and the passenger carriages with smoking and non smoking compartments, a dining car.

The passengers' compartments have numbered seats.

At intervals a guard or a special inspector checks the travelers' tickets.

The train arrivals and departures are posted up in time, the passengers being invited to the trains by loudspeaker.

• What kind of trains can passengers get on?

Express trains

Fast trains

Slow trains

Through trains

Commuting trains

• What luggage do you usually have about you?

Light luggage

Heavy luggage

A suit case

A truck

Hand luggage

• Under what circumstances do you book?

A single, one way ticket

A return, round trip ticket

A platform ticket

A season ticket

• I wonder whether you have watched the rush in a railway station.

People looking up members in the Telephone Directory.

People consulting the time table.

People booking in advance.

People getting on and off the trains.

Porters seeing to the passengers' luggage.

The incoming and outgoing trains.

Trains pulling out the station and picking up speed.

• Find the definition for each of the words:

a. railway

b. railroad

c. railhead

d. bulk

e. station

f. bulky 1. U.S. system using trains to carry

2. end of a railway line

3. B.E. system using trains to carry passengers & goods

4. large and awkward

5. large quantity of goods

6. place where trains stop

• Describe your last journey by train using the following vocabulary:

First class sleeper

Through train

Booking office

Luggage rack

Smoking carriage

Return ticket

Entrance gate platform

Ticket collector

Breath talking landscape

Unique landscapes To travel light

To run on time

To change times

To delay

To enjoy

To put out / off the lights

To have a change

Travelling by Air

It is most comfortable and speediest of all means of transport.

Airlines are constantly improving their services.

They are concerned about improving check in facilities hiring well trained deck-in personnel providing excellent in flight services such as: cabin services, seat comfort, in flight entertainment, good catering.

It is advisable to book tickets in advance. You can book :

A first class (P) seat

A Business class (C)

An Economy class (Y)

Before boarding the plane the passengers must have their tickets and passports checked, their luggage inspected, weighed and tag attached to it.

The passengers can avail themselves of the various services offered by the airport:

? the exchange office

? the duty free shop

? the book stall

? the restaurants

They will be waiting for the announcer calling the flight.

The stewardess will take the passengers to the concrete runway where the plane is ready to take off.

• What sort of classes and tickets can you book on any flight?

First class (P)

Business (C)

Economy (Y)

Single -one way

Return -round trip

Direct -point to point

Open dated return

Dated ticket

• Which are the airport formalities?

Flying ticket checking

Luggage weighing

Customs control formalities

Passport control

Security check

• Why are these necessary when the plane takes off?

Fasten your seat belt

Stop smoking

Listen to the instructions given by the air hostess

• What are these for?

The information desk

The currency exchange office

The public address system

Telephone booth

• Can you explain?



To board a plane

To book a ticket

Check in facilities

Catering To hit an air pocket

Liable to duty

Non stop flight

Point to point flight


• Find the definition for the words and expressions:

1) A direct flight

2) Catering

3) Load factor

4) Open dated ticket

5) Check in facilities

6) Break even point

7) Return ticket

8) Long haul

9) Yield a) a point where sales cover cost but do not make a profit

b) one way flight

c) round trip ticket

d) amount of weighed factor

e) long distance

f) to book a ticket leaving the date of the return open.

g) supplying food ready to eat

h) profit

i) places where passengers give in their tickets for a flight

• You want to fly from Bucharest to New York.

Book a flight.

Write down a short dialogue.

? Why do people prefer to travel by air?

? What might a travel by plane depend on?

? What aspects are the airlines all over the world concerned about?

The Customs System

Customs clearance consists in the following operations of the means of conveyance to customs units and production of the accompanying documents.

- customs inspection of the means of conveyance and of the merchandise carried.

- the checking of customs declarations.

The customs Tariffs are applied when clearing the goods through the customs - then customs duties are being charged in conformity with the guide to the law of Import Customs Tariffs.

The guide enters the goods under several columns:

? tariff heading and subheading

? description of the goods

? rate of duty

Customs bodies should check whether the merchandise is in accordance with the customs declaration and transport documents.

Customs duties are charged on the customs value of the goods. If the goods fall under customs restrictions they are liable to duties, if they don't exceed the free tax quota they are un dutiable.

Natural persons may bring in the country personal effects which are duty free.

The Customs Regulations prohibits the introduction into the country of: arms, narcotics, toxic substances, radio transmitters and receivers, documents and printed matter under law restriction.

It is prohibited to take out of the country securities, goods that belong to the national cultural patrimony.

Any traveler who has items coming under customs restrictions should declare them either orally or in writing on a special form.

• What should the officer do in case of contraventions?

-fine you

-confiscate your objects.

-charge a penalty for dutiable goods, for deliberate concealment of prohibited goods.

• How can your passport be?

-in order

-needs the entry / transit visa

-needs no visa

-has expired

• Chose the correct definitions:

a. customs

b. to go through the customs

c. customs clearance

d. customs formalities

e. customs officers

f. customs tariffs

g. customs union

1. agreement between several countries that goods can travel between them paying duty.

2. the government department that organize the collection of taxes or imports.

3. to pass through the area of an airport (port where customs officials examine goods).

4. documents given by customs to show that customs duty has been paid and the goods can be moved.

5. declaration of goods and examination of them by the customs.

6. people working for the customs.

7. list of duties to be paid on imported goods.

• Make up a dialogue using the following vocabulary:

I came from ...

I'll spend a few days as a tourist

Your passport is in regular order

I have no cash

Liable on duty

Personal effects

No charge on

On condition

Prohibited goods

We are through with the customs



To register



All values in the economic system are measured in terms of money.

Our goods and services are sold for money and money is in turn exchanged for other goods and services.

Coins are adequate for small transactions, while paper notes are used for general business.

We also have a wider sense of the word "money" covering anything which is used as a means of exchange.

Originally, a valuable metal (gold, silver, cooper) served as a constant store of value; even today, the American dollar is "backed" by the store of gold which the US government maintains.

As gold has been universally regarded as a valuable metal, national currencies were many years judged in terms of "gold standard"

Today national currencies are considered to be as strong as the national economies which support them.

Valuable metal has been replaced by paper notes. They are issued by governments and authorized banks and are know as "legal tender".

Cheques and money orders perform the function of substitute money and are known as "instruments of credit"

Credit is offered when creditors believe that they have a good chance of obtaining legal tender.

If a man's assets are known to be considerable then his credit will be good. If his assets are in doubt then it may be difficult for him to obtain large sums of credit.

The value of money is basically its value as a medium of exchange or its "purchasing power" which is dependent on supply and demand.

The demand for money is reckonable as the quantity needed to effect business transactions.

An increase in business requires an increase in the amount of money coming into general circulation.

But the demand for money is related not only to the quantity of business but to the rapidity with which the business is done. The supply of money is the actual amount in notes and coins available for business purposes. If too much money is available, its value decreases and this condition is known as "inflation."

The unit of English coinage is the pound sterling which is worth 100 new pennies.

The symbol £ is always placed before the figures.

The abbreviation of "p" is written after the corresponding figures.

The Bank of England issues banknotes for £1, £5, £10, £50 and £100. there are three bronze coins 1/2 (half penny), the one and two new penny, two copper- nickel coins: the five and ten new penny. Then there is the 50p. coin.

# The unit currency in U.S.A:

dollar - a paper bill or a silver coin.

- banknotes of $ 1, 2, 5, 10, 20, 50, 100, 500, 1000

- coins 1¢ 5¢ (nickel), 10¢ (dime), 25¢ (quarter), 50¢ (half dollar) are made of silver.

# How can you ask for a price?

• How much is it?

• How much does it come to?

• How much do I owe you?

• How much do you charge?

• It's very expensive...

• It's rather cheap...

• I'm short of money, can I buy cheaper?

# Say whether these statements are true (T) or false (F)

• The U.S. dollar is a constant store of value.

• Instruments of credit are accepted because they can be converted easily into substitute money.

• The purchasing power of money depends upon supply and demands.

• The demand for money is related to the rapidity with which business is done.

• You can earn interest on a current account.

• Banks lend money to depositors who need capital.

• The main profits of a bank come from lending money at a fixed rate of interest.

• Money is described as "liquid" because it is compared to flowing water.

Everyone borrows money. And when you do this you improve your lifestyle. It may be a risk but it also promises great rewards. Where do you borrow money from? Banks are considered to be profit making machines. They come in all shapes and sizes and they help you.

Lending money becomes one of the main functions of a bank. It is the interest earned from banks that brings in most of the revenue to pay the expenses, including staff salaries of the bank and give a sufficient surplus to pay shareholders a dividend and retain funds in reserves accounts for the expansion of the bank. Before any loan is granted, the following questions must be answered by the customer:

- how much is required?

- the purpose of the loan

- length of time the advance is requested

- the source of repayment

We have the following sources of funds for the Romanian banks:

- bank deposits(Short term, long term)

- borrowed funds

- own funds(own capital, supplementary capital)

The funds that are put out on loans belong to customers. It is their money that is put at risk, so if a bank is making bad or unprofitable loans, this will be reflected in the deposits.

Types of credit or loans:

1.Country loans.(in order to achieve national, political, social and economic goals)

2.Corporate lending.( such as loans for:

- working capital and fixed assets

- overdrafts

- term loans

- syndicated loans

- revolving credit


Types of credits:

We can have:

1. Revocable credits( may be cancelled or amended at any time without prior notice being given to the beneficiary)

2. Irrevocable credits(can be cancelled with the agreement of all parties)

3. Sight credits(allow for payment to be made as soon as documents are presented)

4. Deferred credits(it allows for payment at a future date without calling for a Bill of Exchange).

5. Transferable credit( it can be transferred by the original beneficiary to one or more second beneficiaries).

6. Red clause credits(incorporate a special concession to the beneficiary allowing the advising bank to advance a percentage of the total credit amount before presentation of the shipping documents).

7. Revolving credit(the amount can be renewed or reinstated without specific amendments to the credit being needed).

8. Stand by credits(acts as a guarantee by the issuing bank to the overseas beneficiary against defaults by its applicant customer).

The main principles of granting credits are:

- the banking prudence

- the creditworthiness of the borrowers

- the credits granted should be profitable both for the bank and for the borrowers

- the credits have a destination precise and mandatory which cannot be changed by the borrowers.

- credits are granted under guarantees that are written in the credit contract.

- The bank shall reserve the right to verify its customers.

Forms of Payment:

1. Cash( small amounts can be sent in note form very easily, impractical and expensive if in large amounts).

2. Cheque(remittance is quick and simple, exchange risks unless issued on appropriate currency account, delay in receipt of proceeds by beneficiary where bank insists on collection)

3. Banker's Draft( issue process is straight forward; available in major currencies, expensive to purchase, involves lengthy formalities including giving an indemnity to the bank)

4. International Money Order(cheap, issue process is quick, but appropriate for smaller amounts up to GBP 1000 or USD 2,500..)

5. International Payment Order(no limit of amount, documents can be attached, payment is inter- bank, therefore secure, not appropriate for urgent transfers)

6. Telegraphic Transfer(quick, no limit on amount, an expensive method)

7. Giro Cheque(inexpensive, but can be lost or stolen, remittance is quick and simple)

8. Giro Transfer(simple and quick, number of countries limited)

9. Postal Order(exchange risk for the recipient, can be lost or stolen, number of countries limited).

How ca you define a bank risk?

It is that risk that the bank is being confronted with in its current operations. Banks are subject to all the risks that their customers face. The most significant is the the credit one that arises from lending to individuals, companies, banks, governments.

The main types of risks involved in the banking activity are:

1. The Financial Risks

2. Delivery Risks

3. Environmental Risks

Financial risks:

- Credit risk

- Interest rate risk

- Liquidity risk

- Foreign exchange risk

- Capital risk

Delivery risks:

- operational risk

- technological risk

- new product risk

- strategic risk

Environmental risks:

- defalcation

- economic

- competitive

- regulatory

Some British authors divide the main risks into :

1. product market risks

2. capital market risks

Product Market Risk

- credit risk

- strategy risk

- bank risk

- operating risk

- merchandise risk

- human risk

- legal risk

- product risk

Capital Market Risk

- interest rate risk

- liquidity risk

- currency risk

- discount risk

- basic risk

We may also have:

• The fraud risk

• The country risk

• The market risk

Electronic Banking Services

Electronic banking- essentially automated payment by computer - will increase in importance and volume. The main forms of electronic banking services are:

Telephone Banking

Such a service represents a competitive area and it may be either voice-activated (i.e. the computer is expected to react to customer's voice and comply with his or her instructions accordingly), or electronically activated ( the client speaks over the microphone of their telephone and dials certain numbers meaning a certain transaction). The telephone banking can offer transfers of funds, payments of regular bills, applications for loans and overdrafts etc.

Bankers Automated Clearing System

This system is especially used for funds transfers between the participating members and essentially operates standing orders, direct debits, payment of wages, salaries, rentals, trade debts, etc. Bankers Automated Clearing is supplied with a magnetic tape containing the details of the accounts to be debited or credited. It sorts them into bank orders and, then, it provides each paying bank with the relevant details, a printout being also

Electronic and Internet -Based Payments

Internet banking is a banking product, which follows the older solutions like e banking. E-banking represents a solution which is technologically obsolete, supposing at the client level of that service a phone line and a computer dedicated for such an operation, able to fulfill technical needs quested by the bank and to run (execute) a software program necessary for lie optimal communication with the client's bank. In that way, the person who will handle the e-banking application have to work only from that computer which it is not very good for someone with a dynamical job and with many physical places of work even in different localities or countries.

Despite e banking, the I-banking (Internet-banking) supposes the usage of a computer from wide world on which is installed a browser and an Internet connection. The performances of such a solution are far away better also for the bank and for the end user (the client).

The costs are calculated to a number of 100 banks from the United States of America which are using all the channels, but the costs are represented at a world wide level because they are common to all the banks that promote the electronic pazments.

World tendencies

63 % from the great banks are offering Internet banking services and 59 % are offering electronic banking services. Not all Internet banking institutions are charging the services, but most of those, which do, are starting to use a monthly subscription for the base services . 61 % from the firsts 150-th banks of the United States of America are offering on-line banking services, 15 % don't have included in their strategies for the future the offer of on-line banking service and 19 % already announced their intention to provide such services by the end of 2001.

In May 2000, Forrester Research estimated that by the end of the year 2003 there will exist over 20 million of home users in the United States of America which will use the I-banking services, that means around 30 % of the profits obtained from retail.

At the end of 2000, the specialists from Data monitor estimated that at the end of the year 2005, around 20% of the world population would be connected at the Internet.

Regarding Europe, since March 19, 2001 the British group Vodafone has announced that the first transaction pilot project that will use the digital signature using the mobile phone will start in April 2001 together with the Radio Communications Agency. That announcement was made at a short period of time after the British Government announced that it intended to allow all physical persons to pay their taxes throw an electronic environment, using digital signatures.

On July 19, 2001, the cut-off time until which all the member state of the European Union had to implement the Directive regarding digital signature expired. The ending of that period will lead inevitably to a new beginning in the development of electronic transactions field and in the e-business area.

As a consequence of that, the banks renounced at their territorially development and instead they are concentrating on the new products which are based on new technologies and the Internet development. So, the banks are reorienting their investment politics to new technologies. That supposes the reconsideration of the concept of territorial network of a bank, which is about to become an informational network. At the end, the new technologies allow the banks to be closer to their clients and in the same time to provide them more comfort and a depersonalization of the services due to the elimination of the classical physical direct relation between the account officer and the bank's customer.


These initials stand for the Society for Worldwide Interbank Financial Telecommunication, which is an international organization whose members consist of several hundred of the largest international banks. The society, which was created under Belgian Law and located in Brussels, was formed to accelerate the transfer of funds and other messages between the member banks. .

The system works by means of a telecommunication link between the computer systems of the banks, which allows the rapid transmission of messages. The system is used to execute telegraphic transfers previously sent by cable or telegraph and may also be used for international payment orders/airmail transfers at the discretion of the bank, making for a much faster execution of a customer's instructions. When instructions are transmitted in this way the bank is said to be sending a SWIFT message and for telegraphic transfers the phrase used is urgent SWIFT message.

Lexical Index


Advert - anunt în ziar

Advertisement - anunt, reclama, publicitate

Advertisement canvasser - prospector de publicitate

Advertisement column - rubrica anunturi

Advertisement department - serviciu de publicitate

Advertisement manager - director de publicitate

Advertisement office - birou de primire a anunturilor

Advertising agent - agent de publicitate

Advertising appeal - atractie publicitara

Advertising contest - concurs de reclame

Advertising directory - anuar de publicitate

Advertising expenditure - cheltuieli de publicitate

Advertising rates - tarif de publicitate

Advertising schedule - calendar al anunturilor

Drawback - neajuns

Folder - pliant, dosar

Hoarding.- plancarda

Misleading - înselator

Poster - afis

Target customer - client tinta

To advertise - a face reclama

To boost - a populariza prin reclama

Want ads - anunt la rubrica cereri de serviciu

Mass media

Blurb - prezentare, reclama.

Broadsheets - ziar popular

Cover - coperta.

Coverage - relatare.

Feature - rubrica fixa.

Headline - titlu.

Headlines - rezumatul stirilor principale.

Item - articol.

Jacket - supra coperta.

Layout - aranjarea materialului pentru o carte.

News caster - crainic.

News hawk - reporter.

News release - comunicat autorizat.

News sheet - gazeta de format redus.

News stand - chiosc de ziare.

Newsbill - afis de ziar.

Newsbutcher - vânzator ambulant.

Newsreel - jurnal de actualitati.

Oblituary - anunt mortuar.

Peak viewing time - ora de maxima audienta

Press clipping - taietura din ziar.

Press release - comunicat de presa.

Printing works - tipografie.

Radio schedule - programul emisiunulor.

Rumour - zvon.

Script - scenariu

Sequel - continuare

Sets - decor

Skim - a atinge usor.

Snap shot - instantaneu

Soap opera - telenovela

Stunt artist - cascador

Tabloids - presa de scandal.

The picture flickers - imaginea pâlpâie

The picture is blurred - imaginea este estompata.

The picture is distorted - imaginea este deformata.

The picture washing out - imaginea se sterge.

Time signal - ora exacta.

To bribe - a mitui

To broadcast - a transmite

To browse through - a rasfoi

To cover news - a relata, a comenta.

To hint - a face aluzie.

To issue - a edita..

To re-edit - a reface

To release - a lansa


Base rate - curs de referinta

Blue chips stock - actiuni sigure

Bond - obligatiune,garantie

Bond market - piata hartiilor de valoare

Brand image - imagine de marca

Brand leader - cap de serie

Brisk - piata activa

Canvasser - prospector de piata

Deferred shares - actiuni esalonate

Demand - cerere

Demand rate - curs la vedere

Futures - piata livrarilor la termen

Hardening of the futures - redresarea pietei

Home demand - cerere interna

Home market - piata interna

Margin - marja

Margin in cash - acont în numerar

Margin of profit - marja de beneficii

Market overt - piata publica

Market share - cota pietei

Market swing - tendinta pietei

Market value - valoarea comerciala

Prices levelled off - preturile au atins un nivel constant

Prices picked up - preturile s-au redresat

Prices rocketed - preturile au crescut vertiginos

Rate of exchange - curs de referinta

Rate of interest -.rata dobanzii

Rate of return - rata de recuperare

Revenue - venit al statului

Sales plummetted - vantarile s-au prabusit...

Sales topped - vanzarile au depasit...

Securities - garantii,titluri

Security - valoare,titlu

Settlement day - zi de referinta

Soft market - piata în scadere

Steady demand - cerere permanenta

Steady market - piata stabila

Stock account - cont de capital

Stock adventure - speculare de actiuni

Stock holder - actionar

Stock on hand - stocuri nevândute

Supply - oferta

Terms of supply - conditiile livrarii

To dabble in the stocks - a juca la bursa

To take stocks - a cumpara actiuni

Uncertain market - piata nesigura

Underwriter - garant

Venture capital - capital de risc

Yield - venit al unei investitii


Accommodation - gazduire.

Amenity - farmec,placere.

Appeal - atractie.

Appropriate - adecvat.

Available - accesibil.

Booking - rezervare.

Clerk - functionar.

Chargeable call - convorbire taxata

Commercial hotels- hoteluri pentru oameni de afaceri

Continental breakfast - mic dejun usor

Convenience - confort.

Courses - feluri de mâncare

Discount price - pret redus

Discount - bonificatie

Half fare ticket - bilet cu pret redus

Height - înaltime

Joint destination - combinarea a doua destinatii.

Junction - încrucisare de drumuri

Lobby - culoar, hol mic.

Lounge - hol.

Maid - camerista.

Promotional fares - preturi promotionale

Registration card - registru de hotel

Resort hotels - hoteluri în statiuni.

Roundabout - ocol.

Season ticket - abonament

Settee - canapea.

Shallow water - apa putin adânca

Silversmith - argintar

Soft drinks - bauturi slabe

Sparkling landscapes - peisaje stralucitoare.

Spicy - condimentat

Straight ahead - drept înainte

Tender - oferta.

Ticket nipper - compostor

Ticket window - ghiseu de bilete

Tip - bacsis

To accommodate - a gazdui.

To add - a adauga

To cater - a se îngriji de nevoile cuiva

To chill - a racii

To chop - a taia

To dip - a înmuia

To disturb - a deranja.

To go sight seeing - a vizita orasul.

To melt - a topi

To offer facilities - a oferii conditii.

To outline - a contura

To peel - a descoji

To pour - a turna

To provide with - a furniza

To put up at a hotel - a se opri la hotel

To season - a condimenta

To shake - a agita

To sprinkle - a stropi

To whisk - a bate ouale

Undercooked - crud

Vacant - liber.

Well sitted - comod.

Width - largime

To put through - a face legatura


Account - cont

Account book - registru de conturi

Assets- active

Bank return - venitul bancii

Bill of exchange /draft - cambie

Board of trade returns - statistica comerciala

Bounds - obligatiuni

Bullion - lingou

Cash account - cont în casa

Cash assets - capital în numerar

Cash deposits - varsaminte în numerar

Cash flow - fluxul numerarului

Cash in hand - numerar disponibil

Cheque to bearer - cec la purtator

Cheque to order - cec la ordin

Currency depreciation - devalorizare monetara

Current account - cont curent

Debenture bounds - obligatiune cu dobânda fixa

Deferred payments - plati întârziate

Deposit account - cont de depozit

Earnings - venituri

Expenses - cheltuieli

Figure - cifra

Financial backing - sprijin financiar

Financial futures - contracte pe termen

Gamble - joc de noroc

Gross return - beneficiu brut

Hard currency - valuta forte

Interest - dobânda

Legal tender currency - moneda legala

Let down - declin

Money chest - casa de fier, seif

Money in cash - bani lichizi

Money market - piata monetara

Money on deposit - bani depusi

Money pressure - lipsa de bani

Overdraft- sold debitor

Pay in ship - borderou de varsamânt

Payee - beneficiar

Return - venit, beneficiu, rambursare

Revenue - venit mare, câstig

Revenue assets - capital circulant

Revenue office - administratie financiara

Saving bonds - titluri de economii

Savings - economii

Tax return - declaratie de impozit

Tenor - scadenta unei obligatiuni

To earn - a câstiga

To get into dept - a avea datorii

To grant a loan - a acorda un împrumut

To open an account - a deschide un cont

To owe - a datora

To save money - a economisi bani

To settle an account - a lichida un cont


Business is a long term, highly repetitious activity, frequently requiring people to do the same thing today, tomorrow, the next day.

Many of today's well known businesses were started by one or two people and the ownership of those businesses was very simple. It was during the 19th century that businesses wanted to expand and increase the number of owners. To do this they needed to sell shares. To encourage people to buy shares, governments around the world passed laws which gave people limited liability. During the 20th century many people bought shares in sucessful businesses for the following reasons:

- to have a share in the profit made by the business.

- the hope that a profitable business would attract more and more people to buy shares and this will make the price rise so that shares could be sold at a profit.

The simplest form of business ownership is the sole trader. Here, one person owns the business, takes all the decisions and risks his own money. People enjoy to be self employed and they are happy to have complete control of their own business. But there is no one to share the responsibilities involved in decision making and raising finance is a problem. Sole traders finance their business through a bank loan and the bank will charge a high rate of interest. A bank will ensure that it can get the money back, if the loan is not repaid, by requiring security on the loan. Sole traders are liable for any debts they have, even if they are not the trader's fault. A trader may do a job for a larger business; it may be worth 20 000$ but it will not be paid until the job is complete. The sole trader must spend 9 000 $ on equipment, but when the job is complete the larger business closes down and the 20 000$ are not paid; still, the sole trader has to cover the 9 000 already spent as he has unlimited liability.

Sometimes, a pair of a small group of people will get together to run a business. This is called a partnership. Partnerships face unlimited liability as sole traders do.

Partners may put some money into the partnership in return for a share of the profits but take no part in the running of the partnership, do not work for it and have "no say" in any decisions.Under these circumstances, it is only the money that has been invested that is liable to be used in order to apy off any debts. This is a silent partner and he has only limited liability.

The technical name for both private and public limited companies is joint stock company. It means that the stock in a company is owned jointly by several people.

Some business activity is carried on by the government and this forms the public sector.

Profit maximisation may not be the only aim of a busines; in public companies there is a separation of ownership and control, so that directors and managers may run a company in their own interests.

Business is the production,buying, and selling of goods and services. A business, company or firm is an organization that sells goods or services. A business may be referred to formally as a concern. Then, it may be referred to approvingly as an enterprise in order to emphasize its adventurous, risk taking qualities and business in general may be referred to in the same way, in combinations such as free enterprise and private enterprise.

A business requires tremendous effort to get it going and once going, it requires minimum effort to keep it going. The role of business is to stay in business, providing wages, goods and services into the community and meeting the profit needs of the business and the key stakeholders in the business. The source of funding and capital is considered to be the main difference between the stakeholders and the shareholders. In the stakeholder model, funding is being supplied through bank loans. This means that they will ask for managerial consideration and response from those running the company.

In the shareholder model, stockholders advance capital to managers who act as their agents in pre-authorized ways. Shareholdes buy shares to maximise the return on their investment; the responsibility of the manager in a firm is to engage in activities designed to increase the profits, that is to engage in open and free competition. To create shareholder wealth, the management needs to outperform the expectations shareholders had when they made their investment decisions. In the shareholder model of corporate governance, the focus is on institutional agents monitoring corporate agents in order to enhance the investment prospects of investors. In the stakeholder model, the premise is that a company is more likely to perform well and the shareholders are more likely to benefit, if opportunities are created for the various groups holding an interest in the company to enter into binding relationship. The emphasis in the stakeholder model is the way enterprises are governed while in shareholder model the emphasis is on the way enterprises are managed. The shareholder based entity is more responsive to changes in market conditions.

Both approaches take account of the issues of board checks and balances, abuse of authority and power, the role of boards, director rewards and participation in setting standards for accounting, safety, employee relations and risk management.

In today"s business world we have to take into consideration the two models. The shareholder model encourages a top down, command and control leadership approach whereas in the stakeholder model a team based, shared decision making, servant leadership approach is more likely.

Stakeholder based governance refers to how the organization makes cost effective decisions in terms of wealth creation but with consideration of stakeholders' rights. Corporations have multiple responsibilities and need to balance competing conditions, such as long and short term notion of gain, profit and sustainability, cash and accounting concepts of value, democracy and authority, power and accountability. This model is more common in continental Europe and Japan.

The micro approach to corporate governance refers to shareholders. This is concerned with maximizing wealth creation for shareholders. Control is linked here to profitability, an Anglo American model.

Then business may be referred to as commerce, commercial distinguishing the business sphere from other areas such as government or arts or from non money making activities.

Large companies are being referred to as corporations. Corporate is used to describe things relating to a corporation or to corporations. Large companies operationg in many countries are multinationals. Big business can refer to large business organizations or to any business activity that makes a lot of money. Small companies are referred to as small businesses or small firms.

When a private company is bought by the state and brought into the public sector in a sell off, it is privatized. The first to be sold in a privatization programme are often the companies responsible for the public supply of electricity, water and gas: the utilities.

If a company A owns shares or equity in company B, then A holds a stake, holding or shareholding in B. If A owns less than half the shares in B, then it has a minority stake in B. If A owns more than half the shares in B, it has a majority stake or controlling stake in B. If you have shares in a company you are a shareholder.

A holding or holding company is the one that holds stakes in one or more subsidiaries. If it owns all the shares in a subsidiary, then the subsidiary is a wholly owned one. A holding company"s relationship to its subsidiaries is that of parent company and the subsidiaries" relationship to each other is that of sister companies. A holding and its subsidiaries form a group. A conglomerate is a group containing a lot of different companies in different businesses.

Company A may be attempting to gain control of company B in a takeover bid, maybe by increasing its holding or stake in company B if it already owns shares in B. Company B makes or launches a bid against company A, the takeover target. If company B does not want to be taken ober, the bid is hostile. There are other ways of saying that one company is taking over another one and it means that the company is acquiring another or making an acquisition.

In a leveraged buyout or LBO, a company is acquired by a group of investors, often financed by heavy borrowing. The debt is then paid out of the target company"s operating revenues or by selling its assets. The borrowing involved inLBOs is often high risk debt called junk bonds. LBOs financed by junk were frequent in the 1980s and after an absence following the excesses of that period, they are now coming up again.

Two or more companies may decide to work together by setting up a joint venture or alliance in which each holds a stake. When two companies combine voluntarily, they merge in a merger.

The social role of any business is linked to what we call as serving the future: sufficient profits to satisfy the business and the stakeholders meet today's profits needs. But as the expectations increase society has to invest in ideas and technology that expands the economic base and the wealth of the society. An essential requirement is that each and every business strives to achieve profits over and above immediate business needs and the stakeholders' needs. Without this "surplus profit" there can be no venture capital. Without venture capital, economic growth will struggle to match population growth and the growth in social expectations.

Any business requires true professionalism- the courage to care about people, clients, career.

True professionalism means the pursuit of excellence. If you value something, then you must monitor your performance in that area, acept nothing less than excellence and actively work to learn what to do differently every time you fall short of excellence. Firms must provide help and counsel to those who are encountering difficulties in living uo to their standards, in order to help them get back on track. Once professionals have confirmed their core values, they need to design systems which provide consequences for noncompliance. By leaving each individual professional to decide for himself what level to achieve in key value areas, firms say that the company as a society has no standards that must be adhered to. Excellence in such areas become a matter of personal professional choice. Professionals must live by the slogan " you are allowed to fail, you are not allowed to give up trying."

The oposite of the word professional is not unprofessional, but rather technician. These may be highly skilled, but they aren't professionals until they demonstrate characteristics such as:taking pride in their work, showing a personal commitment to quality, reaching out for responsibility,getting involved, looking for ways to make things easier for those they serve, listening to the needs of those they serve, being team players, honest, trustworthy, loyal, open to constructive critiques.

Professionalism is an attitude not a set of competences. A true professional is a technician who cares. And if finding people with technical skill is usually easy, finding people who are filled with energy, drive, enthusiasm personal commitment to excellence is hard. Because real professionalism has little to do with which business you are in, what role within that business you perform, how many degrees you have. It implies a pride in work, a commitment to quality, a dedication to the interests of the client, a sincere desire to help.

Traditional definitions of professionalism are filled with references to status, educational attainments, noble calling. Now, we refer to attitude and character. So, firms should hire people for attitude and train for skill. Being a professional asks for treating people as professionals that is invest in them. Then professional success requires more than talent, it asks for initiative, involvement, enthusiasm, commitment.Being good at business development involves nothing more than a sincere interest in clients and their problems and a willingness to go out and spend the time being helpful to them.

Success in business life means not only good professionalism but effective functioning of the firms, positive outlooks.

The Secrets of Achieving More with Less

Some things are likely to be considered more important than others. You can achieve more with less effort, time and resources. We think that there is an inbuilt imbalance between causes and results, inputs and outputs, effort and rewards. But each individual can be more effective and happier, each profit seeking corporation can become very much more profitable, each non profit organization can also deliver more useful outputs, every government can ensure that its citizens benefit much more from its existence. For everyone and every institution it is possible to obtain much more that is of value and avoid what has negative value, with less input of effort, expense or investment. At the heart of this progress there is a process of substitution. Resources that have weak effects in any particular use are not being used sparingly. Those which have powerful effects are being used as much as possible. Every resource is ideally used where it has the greatest value. Wherever possible, weak resources are developed so that they can mimic the behaviour of the stronger resources. Business and markets have used this process for many years.

And so we call for a well known principle namely "the 80/20Principle" which tells us that a minority of causes, inputs, efforts lead to a majority of the results, outputs or rewards and that our daily lives can be improved by using this principle. A new way to use this principle is the 80/20 thinking, that is about any issue that is important to you and asks you to make a judgement on whether the principle is working. This is the daily life , non quantitative putting into practice of the principle. It is used to change behaviour and to focus on the most important 20 per cent. It works when it multiplies effectiveness. Action resulting should lead us to get much more from much less. When using this principle we do not assume that its results are good or bad or that the powerful forces we observe are necessarily good. We decide whether they are good and either determine to give the minority of powerful forces a further shove in the right direction or to work out how to frustrate their operation.

By putting it into practice, this principle implies that we should do the following:

- celebrate exceptional productivity, rather than raise average efforts.

- look for the short cut, rather than run the full course

- exercise control over our lives with the least possible effort

- be selective

- strive for excellence in few things, rather than good performance in many

- delegate or outsource as much as possible in our daily lives and be encouraged rather than penalized by tax systems to do this

- choose our careers and employers with extraordinary care

- only do the thing we are best at doing and enjoy most

- look beneath the normal texture of life to uncover ironies and oddities

- in every important sphere work out where 20 per cent of effort can lead to 80 per cent of returns

- calm down, work less and target a limited number of very valuable goals where the 80/20 principle will work for us, rather than pursuing every available opportunity

- make the most of those few "lucky streaks" in our life where we are at our creative peak and the stars line up to guarantee success.

The 80/20 Principle applied to business has one key theme- to generate the most money with the least expenditure of assets and effort.

The classical economists of the XIXth and XXth century developed a theory of economic equilibrium and of the firm that has dominated thinking ever since. The theory states that under perfect competition firms do not make excess returns, and profitability is either zero or the normal cost of capital, the latter usually being defined by a modest interest charge. Then the theory of the firm goes like this: in any market, some suppliers will be better than others at satisfying customer needs. They will obtain the highest price achievements and the highest market shares.

More than this, the objective of 80/20 thinking is to generate action which will make sharp improvements in your life and that of the others. Thinking escapes from the linear logic trap by appealing to experience, introspection and imagination. If we are unhappy we do not worry about the proximate cause. We think about the times we have been happy, we do not look for causes of failure, we imagine and then create the circumstances that will make us both happy and productive.

What do you think about the following insights for our personal life:

> 80 per cent of achievement and happiness takes place in 20 per cent of our time.

> Our life can be affected by a few events and a few decisions. The decisions are often taken by default rather than conscious choice; we let life happen to us rather than shape it; we can improve it by admitting the turning points and by making the decisions that will make us happy and productive.

> There are always a few key inputs to what happens and they are often not the obvious ones; if the key causes can be identified and isolated we can very often exert more influence on them that we think possible.

> Everyone can achieve something significant. The key is not the effort but to find the right thing to achieve. You are no doubt more productive at some things than at others but one have to dilute the effectiveness of this by doing too many others where our skill is nowhere near as great.

> There are always winners and losers and always more of the latter. You can be a winner by choosing the right competition, the right team and the right methods to win.

> Most of our failures are in races for which others enter us. Most of our success comes from races we ourselves want to enter. We fail to win most races because we enter too many of the wrong ones: their ones, not our ones.

> Few people take objectives really seriously. They put average effort into too many things, rather than superior thought and effort into a few important things. People who achieve the most are selective as well as determined.

> Most people spend most of their time on activities that are of low value to themselves and others. The 80/20 thinker escapes this trap and can achieve much more of the few higher value objectives without noticeable more effort.

> An important decision is the choice of allies. Almost nothing can be achieved without allies; but most people do not choose them carefully. Some of us have too many and do not use them properly. 80/20 thinkers choose a few allies carefully and build the alliances carefully to achieve their specific objectives.

> Money used rightly can be a source of opportunity to shift towards a better lifestyle.

> Few people spend enough time and thought cultivating their own happiness. They seek indirect goals(money, promotion), that may be difficult to attain and will prove to be extremely inefficient sources of happiness. Happiness not spent today does not lead to happiness tomorrow. It will atrophy if not exercised. The 80/20 thinkers know what generates their happiness and pursue it consciously, cheerfully and intelligently, using happiness today to build and multiply happiness tomorrow.

> The logic of professional success leads to ever greater professional demands. To succeed you must aim for the top. To get there, you must turn yourself into a business. To obtain maximum leverage, you must employ a large number of people. To maximize the value of your business, you must use other people's money and exploit capital leverage- to become even larger and more profitable.

> If you decide which shares to buy it is good to specialize in an area in which you consider yourself an expert. Possibilities are almost endless; you could specialize in shares of the industry in which you work or of your hobby, your local area or anything else you are interested in. if you like shopping you might decide to specialize in the shares of retailers. Then, if you notice a new chain springing up, where new store seem to be full of keen shoppers, you might want to invest in those shares.

> The key to making a career out of an enthusiasm is knowledge. You must know more about an area than anybody else does; then work out a way to market it, to create a set of loyal customers. It is not enough to know a lot about a little. You have to know more than anybody else, at least about something. You should not stop improving your expertise until you are sure you know more, and are better in your niche than anybody else. Then, reinforce your lead by constant practice and do not expect to become a leader unless you really are more knowledgeable than anyone else.

Many years ago, Aristotle said that the goal of all human activity should be happiness. It seems that we haven't listened too much to him. Perhaps he should have told us how to be happy. So, he could have started by analyzing the causes of happiness and unhappiness. Happiness is profoundly existential. Past happiness may be remembered or future happiness planned, but the pleasure it gives can only be experienced in the "now". One of the 80/20 hypothesis would be that 80 per cent of happiness occurs in 20 per cent of our time. It is interesting that those who are happy with most of their lives are more likely to be happier overall; those whose happiness is concentrated in short bursts are likely to be less happy with life overall.

Are there some ways to be happier?

> Identify the times when you are happiest and expand them as much as possible.

> Identify the times when you are at least happy and reduce them as much as possible.

Or :

-spend more time on the type of activities that are very effective at making you happy and less time on other activities.

- start by cutting off the spots of unhappiness, the things that tend to make you actively unhappy.

The best way to start being happier is to stop being unhappy. You have more control over this by avoiding situations where experience suggests you are likely to become unhappy.

- for such activities that are ineffective at making you happy it is good to think systematically of ways that you could enjoy more.

- by cultivating habits of optimism we can have a happier life as optimism is an ingredient for both success and happiness.

- we must sometimes change the way we think about events; we can train ourselves to break the self reinforcing pattern of depression by simple steps such as seeking out company, changing our physical setting or forcing ourselves to exercise.

- we can change the way we think about ourselves; we can make ourselves happy or unhappy by the way we decide to feel. We must make the choice that we want to be happy. We owe it to ourselves and to other people too. A positive self image is very important, a sense of self worth can and should be cultivated; you know that you can do it: give up guilt, forget about your weaknesses, focus and build on your strengths, remember all the good things you have done, all the small and big achievements.

- we tell ourselves stories about us. We have to do this and we will increase the sum of human happiness by starting with ourselves and radiating out to others.

- we can make ourselves happier by changing events we encounter and that make us depressed or miserable.

- we can become happier by changing the people we see most( the amount of time spend with them has to be changed).


Richard , the reporter: Good morning Mr. Osborne, thank you for being so kind to me and give me some answers.

Mr. Osborne: I am available for only 20 minutes because I am meeting the Company executive.

Richard: Would you be so kind and tell me if there are secrets for successful businessmen because people wonder how you managed to become in such a short time a well known businessman.

Mr. Osborne: Well, first you have to be open minded and explore ideas, to aim for the top. You must turn yourself into a business. You must use other people's money and exploit capital leverage.

Richard: Do you think that professionals have to be very close to you?

Mr. Osborne: You need them to get excellence and then money will come, no doubt.

Richard: Why is strategy important?

Mr. Osborne: If you arrive at a useful business strategy you can be successful and raise profit.

Richard: Where are you making the most money?

Mr. Osborne: I am attentive to long term investments when the stock market is low, I build my investments on expertise, I consider the merits of the emerging markets, I run my gains...

Richard: What is the key to understanding and driving up profitability?

Mr. Osborne: Competitive segments as parts of our business where we face different competitors or competitive dynamics.

Richard: What does business require?

Mr. Osborne: Decisions tacking and analysis. Since 1950 business has been blessed by management scientists and analytical managers incubated in business schools, accounting firms and consultancies who can bring analysis to bear on any issue.

Richard: Can you work less, earn and enjoy more?

Mr. Osborne: Yes, your thinking has to be strategic, you have to be ambitious and trust your own values.

Richard: Are you happy? If so, what makes you be happy?

Mr. Osborne: I have found two ways to be happy: first to identify the times when you are happiest and expand them as much as possible, and to identify the times when you are least happy and reduce them as much as possible.

Richard: Thank you for your time given and I wish you a prosperous life.

Enlarge upon the following:

1. Happiness is a duty. We should choose to be happy. We should work at happiness. And in doing so, we should help those closest to us, and even those who just stumble across us, to share our happiness.

2. Time is the benign link between the past, present and future. Time keeps coming round, bringing with it the opportunity to learn, to deepen a few valued relationships, to produce a better product or outcome and to add more value to life. We do not exist just in the present, we spring from the past and have a treasure trove of past associations, and our future is immanent in the present.

3. One good rule for being successful is: "realize that knowledge is power".

Do you agree or disagree:

1.An essential ingredient of a happy day is mental stimulation, as well as a spiritual and artistic one.

2. Lack of control is the root cause of much unease and uncertainty.

3. Objectives that are too easy will lead us to be complacent, accepting mediocre performance. Those which are too tough lead us to self fulfilling, self perceptions of failure.

4. Life's unplanned contribution should be incorporated into our own plan so that it can proceed to an even higher level.

5. People with low self esteem and self confidence are a nightmare to live with, however much mutual love abounds.

6. Most of the satisfaction you draw from all of your friends will be focused in your relationship with a small number of close friends.

7. A short cut to lasting happiness is to evolve the lifestyle you and your partner want and this requires of course a harmonious balance between your work life, home life and social life.

8. The impact of the quality revolution on customer satisfaction and value, and on the competitive positions of individual firms is truly great.

9. The information revolution has a long way to run.

10. Cause and effect, input and output operate in a non linear way. You do not usually get back what you put in; you may sometimes get very much less and sometimes get very much more.

11. The real world comprises a mass of influences where cause and effect are blurred, where complex feedback loops distort inputs, where equilibrium is fleeting, where there are patterns of repeated but irregular performance, where firms never compete head to head and prosper by differentiation, where a few favoured souls are able to corner the market for high returns.

This principle can help people get a great deal more out of their lives, to raise their effectiveness and happiness, to boost profits and what leads to profits. It is a practical tool for making a more sensible world. Business leaders who observe the principle at work and see that 20 per cent of products or revenues are producing 80 per cent of profits and that 80 per cent are contributing only 20 per cent of profits- do not shrug their shoulders. Sensible and profit maximizing entrepreneurs do something to correct the imbalance; they make the really productive 20 per cent of activities a larger proportion, they use the 80/20 principle in the pursuit of progress to improve on reality as progress relies on finding a better way to do everything.

Now we do not prefer life to be quiet, stable or unaccountable. Now the competition is very tough, and so we strive for solutions and for efficiency in all domains. Any good business asks for

- good and trustful professionals

- developing personal career strategies

- caring for the genuine clients

- cost reduction and service improvement

- good marketing strategy

- the right management

- the valuable negotiation stages

- the appropriate funding

- finding the best solutions in order to increase profit

- sticking to the rule of the few: the search for the high product quality

- using technology at its best

- a good fitting into the world

- courage in entering a business, faith in progress, in the great leaps forward, in mankind's efforts to improve life.

- creativity and determination

More than these all, I do think that we have to ponder over the following:

" God plays dice with the universe. But they're loaded dice. And the main objective is to find out by what rules that were loaded and how we can use them for our own ends"!

Discussion points:

1. How can development in business life be carried out?

2. Is life different for a businessman?

3. What do businesses operate with?

4. How important are trust and confidentiality?

5. What do we expect from a professional?

Enlarge upon the following:

1. It is better to make the wrong decision than to make no decision at all!

2. Support any of your views regarding true professionalism with examples from your own experience.

3. Everybody begins at the bottom!

4. Tackling challenges in business life is not easy at all!

5. There will always be a time for healing....

Additional Vocabulary

To set up in a business- a se lansa în afaceri

Bid- oferta

Bidder- licitant

Bond- obligatiune

Business forecast- prognoza economica

Business data processing- informatica de gestiune

Business assets- active comerciale

Business environment- mediu de afaceri

Business expenditure- cheltuieli de reprezentare

Business outlook- prespective economice

Business manager- director comercial

Corporation earnings- veniturile societatilor pe actiuni

Corporation income tax- impozit asupra veniturilor corporatiilor

Corporation sole- corporatie individuala

Corporate acquisition- achizitie de firma

Corporate banking- servicii bancare pentru firme

Corporate body- persoana juridica

Corporate bond- obligatiune emisa de o societate

Corporate equity- capital social/ fonduri proprii

Corporate securities- titluri de societate

Corporate venturing- furnizare de capital de investitie de catre o companie altei companii

Equity- capital al actionarilor într-o companie

Equity shares- capital investit în actiuni cu drepturi asupra profitului

To hold- a cuprinde,a retine,a tine sub control,a organiza, a mentine, a se aplica.

Holder- detinator, purtator, proprietar, concesionar

Junk bonds- obligatiuni riscante

Joint venture- societate mixta

Interest- dobânda

Leverage-putere, influenta, randament,raport dintre creante si capital, indice de îndatorare, mijloc de majorare a profitului.

Leveraged buyout- preluare asistata, pe credit.

Leveraged management buyout- cumparare de câtre salariati

Liability- responsabilitate, raspundere

Security- titlu de valoare

Security market- bursa de valori

Sole trader- comerciant pe cont propriu

Take over- preluare

To merge- a fuziona

Trader- speculator la bursa de valori, comerciant

Merchandise- marfa

Merchant- comerciant

Willingness- bunavointa

Willing- dispus, binevoitor


A company is a very special form of business. It is owned by the shareholders but has a separate legal existence from the people who own it. The shareholders elect a board of directors to run the company on their behalf. If the company has 2- 50 shareholders it is a private one. The liability is limited to the money that the shareholders have used to buy shares. If the shares are traded on the stock exchange we have a public limited company. Members of the public can buy these shares by going through a stockbroker or bank.

In business we must create for ourselves a set of attitudes and values that balance the conflicting factors, enabling us to act effectively with integrity, dignity, understanding. So we'll have better relationships with our partners and our life becomes richer. Emotional containment ensures then that the business values are not undermined by other values from our society, such as we perhaps learned early in life.

We then have to know that there is no social health without economic wealth; the role of business is to stay in business, providing wages, goods and services into the community and meeting the profit needs of the business and the key stakeholders in the business.

The business does not operate in a vacuum; there are competitors, there is a level of economic activity, there is rapidly changing technology.

The visions we have for our businesses are what makes them and us really successful. Setting goals and objectives will help us achieve our vision. The key to success and happiness in life is to create a positive vision, to remain true to one's own spirit, to have the energy of challenge.

But running a business is never easy. It's a ride through a range of hazards and difficulties but one thing is sure: life will rarely, if ever, be dull. If you do not enjoy running your business, you can't expect to do it well.

Some ways to make a business successful are the following:

1. Ideas- bad or good- are important as the lifeblood of business and vital to its long term success. Ideas are vital to develop new or existing products or services or even to take the first step into a new business.

2. Choosing professional advisers is essential and they can make or break your business.

3. Finding and keeping clients must form an integral part of your planning if you want to grow your business.

4. Research your target companies does take time, but it's well spent. If knowledge is power, then researching a company can give you a much better understanding of what they do and help you to prepare a successful bid.

5. Brand your business and you'll be set apart and enable you to introduce a wider range of products and services more easily.

6. Team up with another business to enhance yours and be competitive on the market.

7. Consider a project based working which has many advantages for the employer and employee. This means working for just one or two employers at any time.

8. Be creative, have an open mind philosophy and a "I can do" attitude. Any business can benefit from using it creatively.

9. Focus on creating a win/win situation.

10. Use your time wisely, as it is not elastic and it will not magically expand to accommodate all we have to do.

11. Keep your employees happy and remember that a happy workforce is a productive one and will contribute to the performance and profits of your business.

12. Make powerful presentations by a good planning and preparation. Exhibitions can be invaluable marketing exercises for any business.

13. Event management is important: organizing gatherings, conferences, seminars, training courses.

14. Networking for success is a way to meet new people, exchange information and get new business.

15. Master the media and you may get rewards by being attentive to the interviews.

16. The success of a business will depend on how well you sell products and services. How do you persuade people to buy the product? The more work you put into planning and developing your sales strategy, the easier it will be to close and develop a loyal customer base.

17. Lasting customer relationships are very important as profitable business starts and ends with the customer. So it's worth giving them the attention they deserve.

18.Ensure that success will come from a website but be careful to a sound strategy. E-commerce revolution is on its way and the staff has to be well trained in this respect.

19. Maintain a positive flow of money in your business by realistic forecasting which will only be of benefit if it is checked and reconciled on a regular basis.

20. Enter into partnership agreement and make sure that your partner can contribute to the business and will strengthen it.

In business life time is important to be taken into consideration as it is our most precious resource. We have to maintain a balance, we have to give ourselves time and opportunity to do things right; we do not get a second chance with time, so we must do our best to make every minute purposeful and enjoyable. Then our goals are set as we want them to be and we can reward ourselves for gains.

A business is a coordinated effort to achieve certain ends summarized in the profit and loss. Joining a business means embracing some part of that at least. The assumption is that everyone wants to be successful and for this within a company it is important to:

* consolidate the aims of the team, the team spirit.

* understand the team' effort to strive for achievements.

* focus on creating a team climate.

* understand the energy of challenge.

* be aware on one's responsibility.

Desire or will is the very essence of success. Without this intensity the actions of success have a hollowness, the hallmark of "but I tried".

Successful business asks for good leadership and this is not some mystical act performed by the few and only able to be performed by them through some luck of upbringing or genetics that made them natural leaders. We can become better leaders than we are; to achieve this means that we need to do the right things at the right time more often than we usually do and we also need to examine ourselves. We also need to have a clear idea of what to do in order to gain the best possible result from others. The actions identified must be the appropriate actions in what is broadly called "western society"(North America, U.K., Europe, Australia, New Zealand).

Leadership is to be taken into account whenever we have in view any business; there are some steps to be followed:

1. The agreement to success for every team member. Everyone wants to be successful as far as goals are clear and business processes are far from being clumsy. Everyone has positive and negative thoughts in their minds most of the time. We know how easy it is for the negative thoughts: the company is not good, the boss is bad...We represent the positive assertively in our mind- "work is rewarding". But we select our thoughts and they influence us. If a person has negative thoughts about the job and the company, work performance is suffering. The negative impact can make the team output less than it should otherwise be. But we are responsible for our own thoughts, so what a manager can do is to point out the consequences. It is clear that when the team becomes focused, gets people organized, celebrates success, then bad attitudes disappear.

Defining success entails the idea of challenge which energizes people.

The team leaders and managers must live as exemplary models of how they expect others in their team to act. Each management team member is expected to be an " inspiring player." The team effort has to be understood properly. The team spirit must be a consequence of doing other things well. Coordinating the effort is to be achieved by the profit profile with each team member being accountable for some number on the profile and this will define success for a team. People have seen now the standards required.

Identifying the behaviours of success. As the goals have been agreed, the steps to be followed are to make clear what actions were most likely to bring about the goals.

In the goal-action principle, the idea of action becomes clear now, we have those behaviours that will best fulfill the goal, derived from the goal and belonging to it. It is important to find the balance between two things in conflict as a crucial act of insight and creativity for the manager and the team. If the issue is finding sales tactics, then the problem is one of creativity for the team to brainstorm possible tactics and then select one or several that best achieves the balance of the required result.

Provide monitoring and feedback on progress and performance. The main concern among the teams was to provide useful guidance on what should be changed to improve the results. Better reports were being sought, better information.

Celebrate success, large and small. Teams celebrate success as people have risen to the challenge. Team results were evident. The progressive build up of life satisfaction was something that occurred beneath the daily flux and it should increase each year. It was seen as related to goals and work had the potential to be a major component.

Teams will remain the core of the business. Before demanding better performance one have to be sure that this can be achieved. So, for every goal there are tasks that must be acted out if the goal is to be achieved. Everyone succeeds if the team succeeds. It is important to recognize individual performance, but from within the framework of the team.

A management team should be a team, not a collection of individuals with personal accountability. This means that every team member understands that they can win only if the team wins and the team wins by achieving the targeted operating profit. Within that, each person has his or her role and tasks within this role. If people can fully perform their own jobs and have the mental, emotional and physical energy to assist others, and if the others accept and appreciate the assistance, then those people should be encouraged and celebrated within the team.

A management team operates within the framework and policy prescribed by the strategic plan and is accountable for creating sales revenue and converting it into operating profit.

To develop a manager means to develop the person. That is, to improve business management or business leadership is not merely an act of adding some skills or some knowledge to the person; knowledge alone is not power; only if it is backed by the ability and willingness of how, the judgement of when to use that knowledge is power.

Intellectual honesty is an important quality that must be taken into consideration. That means being truthful with yourself and not only. We have wishes and dreams, sensitivities about ourselves; so often we do not want to think poorly of ourselves; it is easier and more comfortable to find reasons beyond us for the unfortunate things that happen or for results that should have been . Such emotional forces can and do push us to think in certain ways. Then, intellectual honesty comes to help us: a process of conceiving the factors accurately as a scientist might, without the comfort of the excuses. It allows us to avoid giving up too early and this is one of the hallmarks of all champions.

There are some situations we meet within a company:

There are all kinds of reasons for wanting to be your own boss. Some people like the idea of there being no one in authority over them, telling them what to do, saying their work is not up to standard, turning down their ideas, or insisting on methods that seem pointless. Others are attracted by the thought of deciding their own hours, or days, of work.

Running your own business gives you the status of being self-employed, perhaps also of being a company director. There is the general feeling of independence, and that your income - and perhaps even your way of life - is in your own hands. Some are attracted to the idea of starting a small enterprise and making it grow, much as a gardener tends his plot and makes a number of plants come to maturity, each in turn creating further growth.

If you are your own boss, say some people, work is so much more pleasant. You can get someone else to do the less interesting jobs and you are not bogged down in annoying details. Work becomes easier, too, because you can get someone else to do the more difficult tasks.

Many others want to set up a little business of their own to occupy their spare time, and as a pleasant way of earning extra money from work they like doing.

These are just a few of the reasons commonly given. Some have good sense behind them; others are based on completely false ideas. Most contain some element of truth which gets magnified out of all proportion, and seized upon without it being borne in mind that there are other points to consider as well.

As with so much else in life, running an enterprise of your own entails disadvantages as well as advantages. It is surprising how rarely people stop to consider in real detail just what the drawbacks are, yet this is an essential first step for anyone thinking about whether it is even practicable for him to be his own boss.

An important reason why there is such glamour about being in charge of your own business is that when you are working for someone else, many of the petty irritations of life, as well as the chore of often having to get down to work that you do not feel like doing at that particular time, become associated with being an employee. There is a feeling that, if only you were your own boss, life would immediately become infinitely pleasurable and free from irksome detail.

This is almost entirely misleading. Many of the little annoyances probably have nothing to do with being an employee: being interrupted when you have at last immersed yourself in some disagreeable task, missing the bus when you are in a hurry, feeling tired or in other ways not really up to working hard at the moment, and so on.

These occur just as much when you are your own master. In fact, they tend to happen much more often, while at the same time, their effects can be far more upsetting.

There are very real drawbacks to running your own business, though for the right kind of person, immeasurable benefits also.

A company has two ways of delivering value to clients: either the clients obtain just the accumulated wisdom and talents of the specific professionals who are servicing their work, or the clients can get this, "plus" all the relevant accumulated wisdom, experience, tools, methodologies of the rest of the firm. What does it mean for a company to have value above and beyond the talents of individual professionals? What can a firm do that will help a professional to be more successful than he or she would be at a halfway decent competitor? Maybe:

- provide professionals with the benefit of shared skills and experiences within the practice group.

- facilitate access to the skills of others in different disciplines.

- establish procedures to produce well trained junior professionals.

- achieve a high level of cross selling and access to clients of other professionals.

- provide superior support staff and systems.

- instill a system of supportive challenging, coaching to bring out the best in each professional.

- create an emotionally supportive friendly environment.

- provide for diversification of personal risk.

- establish a powerful brand name that makes marketing easier.

Interesting but more and more in our concern the firm, the company has to be viewed in future. The strategic challenge for professional firms is not to forecast the future, but to ensure that the firm is effective at adapting to already observable market changes. Most professional firms are resistant to change.

Old ways of doing business suffer from inertia and few firms are either willing or able to implement significant changes in the way they manage their affairs. Major trends are being identified and big schemes are announced as responding to them. But a professional firm is not completely at the mercy of unknowable fates. You can make things happen if you want to. Why plan in an unpredictable world? Because you can make sure that the way you run your affairs makes you more adaptable and adaptive.

Through a combination of planning and reexamination of current management practices, firms can become better at listening to the environment and picking up its change signals early. They can also become better at ensuring that they have numerous experiments going on to test new ideas and approaches. Firms should be testing what the market will and will not respond to.

They must avoid complacency, be adaptive by constantly asking:" is there a better way to do what we do?"

Firms are very good at figuring out what they want their people to do differently. They are not so good at figuring out management systems to get them to do it. So, planning means managing in new and different ways. Many companies miss a central truth: if you haven't changed your measures and rewards, you haven't changed your strategy.

A firm has to be better than the competition in the following ways:

- Aggressive listening to the market.- good tactics: focus groups, feedback survey, client panels, formal market research..

- Using market intelligence: each practice is actively gathering market intelligence and is devising new things to do for clients.

- Raising the level of innovation- the management's job is to stimulate experiments and encourage innovation.

- Sharing new knowledge- firms must become good at sharing the results of their experiments.

- Pressure for personal growth through professional performance counseling and practice leadership.

- Management behaviour- management must be perceived as leaders of a changed effort; stimulating new ideas, willingness to provide seed capital for those who wish to try new things.

- Measuring success not only by the volume of work performance but by the type of work it brings in.

What do you think about the following:

1. Visionary companies share a common subset of correct core values

2. Visionary companies require great charismatic visionary leaders.

3. The most successful companies exist first and foremost to maximize profits.

4. Visionary companies are great places to work for everyone.

5. Highly successful companies make their best moves by brilliant and complex strategic planning.

6. Companies should outside CEOs to stimulate fundamental change.

7. The most successful companies focus on beating competition.

8. The only constant is change.

9. Flexibility means drafting several possible scenarios for the future.

10. Companies employed bottom up planning.

Enlarge upon:

1. The Firm of the Future is so Close to us!

2. How Can You Manage Your Clients" Projects?

3. When does a Professional Company Merger Make Sense?

4. What Should a Firm Be Tolerant about?

5. How will the Adaptive Firm measure its success?


Mr. Norman General Manager of a large company is meeting Mr. Cleary a reporter who wants to be informed about the success of the B&Y Company.

Mr.Cleary: Good morning Mr. Norman and thank you for the time you have allowed to me.

Mr.Norman: It is my pleasure and I do not mind sparing some minutes with you!

Mr. Cleary: I would like to write a few lines about your company in the "Capitalul" magazine.

Mr. Norman: Our business has increased and as you may be acquainted with, we have deemed it advisable to open more branches in the country.

Mr.Cleary: What kind of investment would you care for?

Mr. Norman: We deal with textiles. We enlarged our business by getting new partners and we expect higher dividends. The quality of our products has been maintained at a high level. So, wool prices are excellent and the revenue too. If we refer to the profit and loss account, an increase of more than 20% is to be taken into consideration.

Mr.Cleary: How did you manage that?

Mr. Norman: By working with a well trained team, by finding good partners, by having a stroke of luck, by keeping with the new market trends.

Mr. Cleary: I do have some questions if you don't mind. Such as:

- How quickly can one hope to climb the promotion ladder to partner level?

- What are salaries based on as your career progresses?

- How long do most people stay in your company?

- How successful is the company?

- Are you enthusiastic about the development of the company?

- Do you spend money on staff training?

- Where do you intend to expand the sales?

- What persons do you work with?

Mr. Norman:

The best are being promoted to partners; unless you make partner by the age of 35, you will basically never make it.

Salaries reflect the assessment of the employees.

Over a ten year period, less than 40% of those hired are to be retained by the company.

- The shareholders are content as the loss is small.

- Yes, as far as the turnover has increased and we have subsidiaries all over the world.

- There are full and part time courses, most of them being paid by our company.

- In Eastern Europe.

- Those experienced on the sales side, with first class technical knowledge, young, full of energy and new ideas; those who know what competition means.

Additional Vocabulary:

chartered company- companie înfiintata pe baza unei Carte Regale

joint stock c.- societate pe actiuni

unlimited c.- societate cu raspundere nelimitata

limited c.- societate cu raspundere limitata

parent c.- societate mama

wholly owned c.- societate în propietate integrala

unincorporated c.- societate neînregistrata

winding up of a c.- încetarea activitatii unei societati

greenfield c.- societate la început de drum

bogus company- societate fictica

close c.- societate închisa

dormant c.- societate inactiva

company funds - capital al firmei

company identity- imagine de marca

to stay afloat- a se mentine pe linia de plutire


shares- actiuni, titluri de valoare

preference shares- actiuni privisegiate

deferred shares- actiuni cu plata dividendului dupa satisfacerea celorlalte

outstanding shares- actiuni în circusatie

share capital- capital social, în actiuni

share market- bursa de actiuni

share prices- curs

share index- indice

share split- divizare a actiunilor

to share the profit- a împarti profitul

to share one's views- a împartasi parerile cuiva

to share one's experience- a împartasi experienta

to assess-a evalua

assessment- evaluare

assessed- evaluat

turnover- cifra de afaceri

loss-pierdere, deficit

to run at a loss- a lucra în pierdere

loss ratio- rata pierderilor

relocation- mutare

core business- activitate de baza

break up- lichidare

liable- responsabil de

Dealing with a Customer

When dealing with a customer you may encounter some situations:

You have an angry customer because you messed up

The first step in dealing with any angry customer, whatever the reason, is to listen while they get their anger out of their system. Sympathize with the problem with phrases such as, 'How frustrating for you,' or '1 can see how infuriating that must: be'.

Once they have expressed their feelings, and realized that you are listening and sympathetic, they will calm down. At this point it is wise, as well as honest, to hold your hands up and admit your mistake by saying something like. I'm terribly sorry. 1 should have put the order through manually and I clean forgot. I do apologize, especially after it's caused you so much trouble'. This will take the wind out of their sails, not least because so few people actually admit lo their mistakes.

So long as you offer to put things right: in any reasonable way that suits the customer, they are likely to end up feeling very satisfied. Not only have you resolved the problem, you've also been honest with them. It should reassure them that you're a good organization to do business with: everyone makes the occasional mistake, and at least you admit to it and put it right magnanimously.

Some people will advise you never to admit blame when dealing with customers in case they sue you. It may be wise to take legal advice if your mistake has cost them thousands, but in most cases they're not going to sue. If you've cost them just a few pounds, what's the problem? You ought to pay up, so there should be no question of suing. From a legal point of view, refusing to admit blame may sometimes be wise. From an ethical and customer relations standpoint, it is always better to admit your mistakes.

You have an angry customer because one of your team messed up.

Handle this exactly as you would if it was you that had messed up. You are responsible for your team, and you should carry the can. The customer doesn't need to know which individual in your team messed up; it's enough to know that it's your team. Don't ever try to pass the buck when speaking to a customer, tempting though it may seem to say, 'I'm afraid a junior member of my department made a mistake'.

You will obviously need to talk to the team member in question privately. However, you need to separate the mistake from the customer's reaction to it. If the customer overreacted wildly to a minor error of judgement or an understandable mistake, don't make a big deal of it with your team member just because the customer made a big deal of it with you. If you're angry and upset by your exchange with the customer, wait until you've calmed down before tackling the person who made the mistake.

You can't deliver on a promise to a customer

The important thing is to limit the damage, and there are two key ways to do this:

1. The most important thing is to give your customer as much notice as you possibly can. The later you tell them, the deeper the hole you land them in. Plenty of warning gives them time to find a contingency without it becoming a major issue. If you're not sure whether you can deliver but it's looking increasingly dodgy, you'll need to explain the situation before you know for certain whether you'll have to let them down. Then they can choose whether to take the risk or whether to find an alternative.

2. When you tell them, apologize profusely and let them know that you recognize how inconvenient it is for them. Then offer them whatever you can to make up for it. This might mean telling them you can deliver part of what they want, or they can have everything they want but later than they hoped or to a lower standard. Or you might say, 'I can't do this, but I can find you someone who can'.

A major customer threatens to go elsewhere unless you make concessions you can't afford

They say that they'll go to your manager/the top of your organization/the press. The answer is in the question here. If you really can't afford the concessions, you can't afford the customer and you're better off letting them go. Before you do, however, make sure that there really aren't any other concessions chat would suit you both. If you can't drop your prices low enough, maybe they can pay in installments or on other very good terms. If you can't deliver soon enough, perhaps you could deliver part of the order.

If there is no meeting ground, make sure you part on friendly terms. Don't tell them they'll regret changing supplier. That way, they may well come back to you. If they were bluffing to get you to make concessions, or if their new supplier lets them down, you want them to feel they can come back to you easily.

A disgruntled customer threatens to report you

They say that they'll go to your manager/top of your organization/the press. Let them. Presumably you've done nothing wrong, so you have nothing to worry about. Arguing with them will make it worse, and look as if you're running scared. If you say to them, 'If you feel you want to take it further, that's up to you,' it's more likely to deter them. After all, they were threatening in order to get a response from you. The tactic clearly hasn't worked so they may well abandon it.

If the customer threatens to go to someone internally, from your immediate boss to the MD, forewarn the manager concerned. They won't be too pleased if they get a call from a customer and look a fool because they don't have any of the facts. So brief them fully.

If by any chance you are at fault, you're still better off 'fessing up. It is better for your boss to hear it from you first than from an angry customer.

A customer is wrong

Sometimes a customer accuses you of doing something that you really haven't done. In fact, maybe their subsequent problems have arisen because they failed to give you their full address, or sign the cheque. So what do you do when they complain? Is the customer really always right?

You need to listen to their complaint, and sympathize with their problem just as yon would if the complaint were justified. You can still say, 'How frustrating!' or I can see that must have put you in a difficult position,' without admitting blame.

Tactfully explain what has caused the problem, but don't make them feel stupid or they could get defensive. Avoid words and phrases such as 'fault' or 'you should have . . Give them an excuse for their mistake. For example, 'Our delivery terms are 28 days unless you specify express delivery. I know how easy it can be to overlook that sort of thing, especially when you're in a hurry.'

Let them feel their point is valid, without accepting blame. Say for example, 'Maybe we should print our delivery terms on the order form as well as on the terms and conditions. I'll suggest that to the department concerned.'

Don't offer refunds or replace items just to calm a customer down, in case it implies that you were at fault. This might be an unwise precedent. However, if you really want to do something, describe it as a gesture of appreciation for bringing their problem to your attention.

You know one of your customers is lying to you

You get them occasionally, customers who frequently claim, for example, that the goods arrived faulty or damaged when you know for a fact that they didn't. Whatever you do, don't bother arguing. You've got two options:

1. give the customer the benefit of the doubt

2. stop supplying them and ask them to go elsewhere.

You've already got a dishonest customer. If you argue with them, you'll have an angry, dishonest customer - and that's worse. They may spread rumours or damaging gossip about your organization. So don't fall out with them.

The other trap to avoid is changing your systems in order to try and combat their dishonesty. You could inconvenience all your honest customers, and make your own lives more complicated, just for the sake of a customer who doesn't deserve that kind of effort. So if you don't want to put up with it, just drop the customer.

An important customer demands more of your time than you can spare

If you have a very talkative customer who engages you in long-winded conversations, you need to find a way to get the information you need from them and then terminate the conversation without upsetting them. You can't keep interrupting them without sounding rude, so you need to interrupt yourself.

It may sound strange, but it makes sense really. You need to get a word in, but to do it by joining their conversation rather than deflecting it. Once you're in, then you can change the subject, like this: 'I quite agree, the traffic's getting silly on the North Circular these days. By the way, when do you need these delivered by?'

There's another kind of demanding customer, too: the one who's on the phone 10 times a day with endless minor queries. You can't avoid this customer altogether, and you'll offend them if you try. You just need to get them to be less of a nuisance:

If someone's calling several times a day, tell them the first time they call that you're very busy at the moment and you want to wait until you can give them your full attention. Ask if you can call back at the end of the day. They can save all their questions until you ring back, and you have only one call all day, at a time of your choosing.

Put your voicemail on or have someone field your calls. You do have to talk to this customer sometimes, however, so don't wind them up by taking ages to call back. Once they learn they can trust you to call back the same day - albeit at the end of the day - they'll start to feel happier about leaving messages.

If the customer is on email, ask them to email you instead of calling. Explain that you prefer to have everything in writing so you can be sure you have all the details, and you don't forget to follow anything up. Now you can deal with the queries at a time that suits you. You may have to speak to them occasionally but, again, you can choose the time.

A good and previously reliable supplier lets you down badly.

In the short term, you need to find another supplier. The question is whether in the long term you should change to a new supplier or whether you should give this one another chance. In the end it's your decision, but here are some considerations to lake into account:

-Why did they let you down? Is it something they should have foreseen and avoided? Or was it the kind of freak problem that no one could have anticipated?

- How did they let you down? Did they give you as much warning as possible that trouble was brewing? Did they sound suitably concerned at letting you down? Did they do anything to try to mitigate the damage?

- Have they ever let you down before? Have there been other minor incidents, or is this the first problem in years?

- Why were you using them in the first place? What is it that makes them better than other suppliers?

- Could you find another supplier as good as them in all the essentials -price, quality, reliability, service and so on? Shop around and see what else is available.

By the time you've thought through all these questions, you should be in a position to decide whether to stick with this supplier or not. And there's one other thing you can do- monitor the service and quality you get from whichever supplier you use as a replacement (assuming you find another supplier for this order). This should give you an idea of whether it's worth moving your contract.

You have a PR crisis on your hands

Everyone loves a drama - except perhaps the people caught up in it. Inevitably, then, many crises will attract the attention of the press. They gather like hyenas around the kill, each hungry to get first bite at the story. And not only do you have to deal with the crisis itself but you also have to cope with the press, who will be ready at any moment to turn on you if you make a wrong move.

The press can be either a blessing or a curse in a crisis, and the balance can lie in how you handle them. Of course, sometimes the press are on your side from the start. If your buildings have been damaged by severe weather, or a lorry has careered off the road straight through your shop window, you have the sympathy of the media from the outset.

But the press always want someone to blame, and all too often they will pick on you. If you're making redundancies, if you've polluted the river that runs past the factory or if an accident has been caused by faulty equipment then they'll be sniffing round for evidence to pin the blame on you.

So what can you do? The good news is that there is a wealth of advice, derived from the experience of thousands of organizations over many years. There are ways to handle the press (and other media) that will at least minimize the damage and, at best, turn their attitude around to one of support for your case. So below are the key rules for handling a PR crisis.

Tell the press what's going on right from the start. The more information you give them, the less they will need to dig die dirt to get a decent story. Don't wait until you've solved the crisis - keep them posted from the moment they turn tip asking questions.

It's no good keeping the press informed if you don't also keep your own people posted. Otherwise disgruntled staff, who are being kept in the dark, may well decide to pass on to the press their own outdated or misunderstood version of the facts.

Honesty can actually be a disarmingly smart policy. Many years ago, the BBC accidentally double booked two key political figures to give one of the prestigious Reith lectures. One had to be cancelled, of course, and the press were full of how and why he had been snubbed. The Director General of the BBC adopted a simple but ingenious approach when questioned by the press. He just said: 'It was a cock up, OK?' He was open, honest and wrong-footed the press completely. We all have cock tips from time to time, and the press understand that as well as anyone.

There are three rules to remember to keep things simple. First: the press don't know your organisation or your industry as well as you do, and they want to print a clear, simple story (or their readers. So don't confuse them with unnecessary details, jargon or background information they don't want. Just keep your message uncluttered. If they ask for more, give it to them if you can. But don't volunteer it.

The second rule of keeping your story simple is to make sure you have only one spokesperson if you possibly can. Otherwise there is a danger that they may contradict each other. One single point of communication means one single, consistent voice.

And the third rule is: never speculate. This simply adds to the confusion. Speculation may be reported as fact - it often is. So if you're asked to guess at the cause of the chemical leak, how many redundancies there are likely to be or when the building will be operational again, politely decline to comment. Or just say, I don't know'.

So, the three rules of keeping it simple are:

1.don't give more information than you need to

2.have a single, consistent message delivered by a single spokesperson

3.never speculate.

Then, get your priorities right

You will horrify readers, listeners or viewers if you start to talk about the financial cost of this disaster when people have been killed or injured.

Be aware how things look to other people

Be aware of what the public perception of your crisis handling will be. It's not enough to be right - you have to be seen to be right. Suppose a press story breaks reporting that many supermarket eggs are infected with salmonella, and there is a slight risk of serious illness. You are an egg producer. If you react by insisting that there is no danger at all, people will just think, 'They would say that, wouldn't, they?'

There may indeed be no danger - or there may be. It doesn't matter. What matters is that people will think you are trying to cover up the facts for your own ends; that you're prepared to lie to people about their health rather than lose profits. So consider how your version of events, which people will consider potentially very biased, will look. It is better to say that you are very concerned about the health scare over eggs - you have no evidence that there is any risk at all, but you're taking action to find out the facts as fast as possible. Support any research - maybe donate funds to it - and invite inspectors to check out your operation. Say you would welcome official guidelines on how your organization can remove any risk, and generally be seen to be taking the action the public, wants, not just paying lip service to it.

Never 'no comment'

What do you think when you hear an interviewee say 'no comment', or when a report says that 'the company declined to comment'? You think they're guilty, don't you? You reckon they've got something to hide. That's what everyone thinks. And it's what they'll think about you, if you say 'no comment'. So don't. If there's nothing you can tell them, it's better to say, Tin afraid I don't have any more information at the moment'.

Be positive

If you seem worried or down beat in interviews, people will assume you're in trouble. If you come across as angry they will take a dislike to you. People will read a great deal into your attitude, so make sure it is always friendly and positive, especially when you're talking to the broadcast media. If people have suffered, it doesn't do to look too cheerful about it, of course. But you can still be open and courteous. Make sure you show sympathy for any victims of the disaster, whether or not you accept responsibility.

Be friendly

The press are only doing their job. If you want them on your side, you need to accept this and not hold grudges against them the phone and the cafeteria and give them a warm room. Treat them politely and with respect and be as helpful as you can.

Get your friends on your side

If the press are against you, recruit people outside the company who will speak on your behalf. Satisfied customers, trade association contacts, suppliers, ex-employees . . . anyone who the press will be interested to talk to and whom you can rely on to back you up. They will assure the press that your safety standards are exemplary, that you're a great company to work for, that you are known for your reliability or whatever it is you need said. Outsiders always have more credibility than insiders.

Go the extra mile

If you've made a mistake, or are believed to have made a mistake, do everything you can to put it right. Even if people blame you for the crisis itself don't give anyone an excuse to complain about your response to it. Do even more than you have to give people extra time off, replace their damaged property without quibble and better than it was before, pay to clean up the river and fund a new wildlife reserve along its banks. Show that you're sorry you messed up, but you genuinely want to make everything better.

You may remember a few years ago a cross channel ferry ran aground on a sandbank. Due to the vagaries of the tide it was a day or so before they could float it off again. Meantime everyone was stuck on board. But the ferry company and the crew leapt into action as soon as the disaster struck. They kept everyone informed, refunded the cost of the tickets, gave away all the free food and drink they could and generally bent over backwards to make up for the discomfort and inconvenience.

When the ferry finally docked, the press were waiting to interview the passengers as they disembarked. But much to their disappointment , they couldn't find a single passenger who had a bad word to say about the ferry operator. They all insisted, 'It was just bad luck, and they looked after us beautifully.

Remember, you don't have to deal with very many crises , but the press deal with them for a living. They are bound to be smarter than you at it, so don't try to fool them - they'll make you look the fool. Just play it straight, honest and open.

Topics for discussion:

2. How can you discover the way the client defines quality?

3. Can you guarantee your clients" satisfaction?

4. How important is listening when you deal with difficult clients?

5. Which is the key talent in good selling?

6. Who decides value?

Enlarge upon the following:

* "Do good work and the clients will come"!

* "Professionals are supposed to care about their clients, aren't they"?

* "Quality must be negotiated continually."

* "New business will be won only to the extent that the client believes the professional cares and is trying to help."

* "Continuous investment must be made in getting better and better"!


Mr. Slide aims at success in business. He is a middle aged, talkative merchant, a retailer and wholesaler too. He has got a large warehouse and a wide range of products. The storage is done in a new, modern building. How important quality is for him might be guessed in the following discussion:

Mr. Daube, the customer: Good morning to you my friend!

Mr. Slide: How are you? I haven't seen you for a month!

Mr. Daube: Well, I was away in France. Now I am back and I do have plenty of products to buy for my store. I would like good quality as you have inured me so far. I need to buy coffee, tea, cigarettes, butter, juice, mineral water, olives, sweets, dairy products, fresh vegetables. I don't want them to be damaged, so please be careful with the packaging. They may be easily spoiled by dampness.

Mr.Slide: They are all well packed, you need not worry. And the quality is the expected one as far as I will always be concerned in stocking only the best goods. I hate to deal in cheap lines. As far as the vegetables are being concerned, I would like to recommend you the ones I brought from Craiova.

Mr. Daube: Are they ripe enough?

Mr. Slide: You will be pleased I do promise you!

Mr. Daube: Now, what about the payment? How would you prefer?

Mr.Slide: As you wish. Cash or by check. If you have a purchase in excess of 5 mil.lei the store grants a 10% discount and 2% additional rebate for cash payment.

Mr. Daube: You are very kind.

Mr. Slide: The prices have gone up lately due to the inflation and to the alignment of the most important products to the European prices(gas, energy.) So that I had no choice but to cope with them. Cigarettes and coffee are a luxury and still most of us cannot live without them. But they are worth buying as the quality is the best one.

Mr. Daube: Maybe more smokers will give up in future or will care more about their health.... And we'll drink less coffee and try to be less stresses and nervous...

Mr.Slide: You see, even if this rise in wholesale prices entails an immediate increase in the retail ones, the consumers are not alarmed. Then retailers will have to change their price labels again and the profits in the luxury trade may not be the ones we wish. Maybe some people living on a present day salary or fixed income will have to do without a luxury that they could have still afforded some months ago. The retail trade can be duller in this respect. Anyway, let's not be so pessimistic because things may change unexpectedly.

Mr. Daube: I trust your products and I will remain your faithful client!

Additional Vocabulary:

to grant- a acorda

storage- depozitare

subsidized price- pret subventionat

brand name- marca de fabrica

to book an order- a înregistra o comanda

sale- vânzare

sale by sample- vânzare cu mostra

sale for future delivery- v. la termen

sale on hire purchase- v. cu plata în rate

sales outlet-punct de desfacere

sales quota- cota de vanzari

sales records- evidenta vânzarilor

sales department- serviciul commercial

overstock- depasire a stocului

price advance- majorare

price alignment- aliniere

price collapse- cadere

price cut- reducere

price gap- decalaj

price maintenance- mentinere

price shading- reducere mica

price freeze- înghetare

price ceiling- plafon de preturi

blanket price- pret global

bid price- pret oferit

bottom price- pretul cel mai scazut

ceiling price- pretul maxim

flat price- pret unic

floor price- pret minimal

peg price- stabilizare

purchase price- pret de cumparare

sell price- pret de vânzare

invoice- factura

delivery- livrare

middleman- intermediary

convenience stores- magazine locale

out of stock- lipseste din stoc

sole selling rights- drepturi de vânzare exclusivista

world market price- pret de pe piata mondiala

store layout- configuratia magazinului


Negotiation is not a science nor is it a branch of technology. It is a life skill. We start to negotiate when we are very young and as we grow older we build up patterns of behaviour that reflect what we feel "works for us". And this will be based partly upon the kind of personality we may have inherited and partly upon the kind of personality we have lived and grown up.

Negotiation in business is no doubt about facts, costs, profits, logical decision making but also about people, their emotions(joy, surprise, fear, doubt, anger, sorrow) , goals and the kind of human beings they are. An understanding of people's motivation and how their personalities can affect their behaviour can be vital in discovering how you can do business with them better and better.

To negotiate effectively one must communicate as such. The message has to be conveyed, received, understood, accepted in order to entail the right actions or responses. The process of transmission is very important - not all negotiations are conducted face to face but there are other choices too: letters, the fax, the electronic mail, the phone. Still there might be some problems such as: they may get missed or misunderstood.

To many personnel managers, negotiation implies collective bargaining. To a sales executive, it will be thought of in terms of making a commercial deal. Quantity surveyors, purchasing managers and lawyers all have their own specialist interpretations of what, in essence, is a process common to all managerial work. In reality, all managers negotiate, if not with outside parties then with each other.

The procedures and language of formal negotiation vary with the type of negotiation involved. A set-piece pay bargaining session has its own system and jargon that differ from those of a meeting of solicitors to settle a claim for libel damages. Yet the underlying principles and much of the psychology of the process are the same for all forms of negotiation.

It is also easy for managers to overlook the fact that much of their informal daily activity is, in effect, negotiation. All managers spend a large proportion of their time trying to influence and persuade other managers over whom they have no executive authority. Consider two examples:

A personnel manager attempts to 'sell' the need for a more systematic form of employee consultation to a reluctant office manager. The company has a general policy of support for employee involvement practices, but has not laid down any specific system or procedure. Neither the extent to which the personnel manager can use the general policy to require the office manager's cooperation, nor the right of the office manager to reject the personnel manager's suggestions is clearly defined. The outcome will be influenced by their possibly differing perceptions of the formal position, and by the powers of argument or persuasion of the personnel manager.

A sales executive tries to persuade the production manager to change a manufacturing schedule to fit in a small order for a special customer. The production manager has full authority to decide production schedules against a weekly output plan set by top management. Officially, the sales manager should make a request through the sales director for an urgent variation to this plan but because the order is only a small one, he approaches the production manager informally and must, therefore, rely on persuasion.

Negotiating skills are, therefore, a very important element in the effective manager's portfolio of personal competencies.

Recognizing when negotiation is occurring is the first step towards acquiring the necessary skills, and this is aided by an understanding of the basic principles involved.

Negotiation is a process, not a single skill. A range of skills are involved in handling this process effectively, but to identify the skills relevant to any negotiating episode, it is important to recognize which elements or principles of negotiation are involved. There are seven principles common to all forms of negotiation:

• Negotiation involves two or more parties who need or think they need each other's involvement in achieving some desired outcome. There must be some common interest, either in the subject matter of the negotiation or in the negotiating context that puts or keeps the parties in contact.

• Although sharing a degree of interest, the parties start with different opinions or objectives, and these differences initially prevent the achievement of an outcome.

• At least initially, the parties consider that negotiation is a more satisfactory way of trying to resolve their differences than alternatives such as coercion or arbitration.

• Each party considers that there is some possibility of persuading the other to modify their original position. It is not essential - though it is usually highly desirable for each party to be willing to compromise. But negotiation can begin when parties have an initial intention of maintaining their opening positions, but each has some hope of persuading the other to change.

* Similarly even when their ideal outcomes prove unattainable, both parties retain hope of an acceptable final agreement.

* Each party has some influence or power - real or assumed -over the other's ability to act. If one party is entirely powerless, there may he no point in the other party committing itself to a negotiating process. The matter can be settled unilaterally by the party with the untrammeled power to act. This power or influence may, however, be indirect and bear on issues other than those that are the direct subject of negotiation.

* The negotiating process itself is one of interaction between people in most cases by direct, verbal interchange. Even when the negotiation is being conducted through correspondence, there is an essential underlying human element. The progress of all types of negotiation is strongly influenced by emotion and attitudes, not just by the facts or logic of each party's arguments.

Negotiation is a process of interaction by which two or more parties who consider they need to be jointly involved in an outcome, but who initially have different objectives, seek by the use of argument and persuasion to resolve their differences in order to achieve a mutually acceptable solution.

It will probably be readily accepted that this definition is relevant to formal negotiations such as pay bargaining or the settlement of a legal claim for damages. Trade unions and employers or the solicitors representing two parties to litigation obviously accept that they need jointly to evolve a mutually satisfactory outcome, starting from differing positions. Each party knows that the other has some power to influence the outcome. A trade union might apply the sanction of industrial action: an employer might reduce the labor force: the claimant's solicitors might stop negotiating and take the case to court: the respondent has some defense if this occurs.

In the second of these examples, the sales executive has no direct power to require the production manager to alter production schedules: the production manager can just say no -- so where does negotiation come in? A willingness at least to consider the request and thereby become involved in a discussion about a possible jointly satisfactory outcome - will stem from several aspects of common interest, or from a recognition of more subtle forms of power.

The sales executive wants the production schedules altered, the production manager does not, but both managers, it is to be hoped, share an interest in the success of the business. To disappoint an important customer may be of more immediate concern to the sales executive than to the production manager, but a good production manager will pay heed to the importance of good customer service. Similarly, the sales executive will recognize the costs and perhaps delays to other orders that a change in the production schedule might give rise to. So a common interest in the good of the business enables both to see something in the other's point of view, and thus encourages a dialogue, rather than the simple exercise of formal authority.

It may be that the sales executive (or the customer on whose behalf the request is being made) is known by the production manager to be highly regarded by the managing director. It might thus be unwise, in terms of company politics, for the production manager to run the risk of being considered unhelpful.

Both managers also know that they have to continue to work together. Without anything being said, both will probably be influenced by knowing that this long-term working relationship could be adversely affected by mishandling the particular incident. The production manager may have the right to say no in other words, not to negotiate but will wonder whether this would cause avoidable friction. There may also be the thought that by agreeing some concession, an obligation may be created that might be capitalized on at some future date.

In the other example, considerations of a similar kind might also lead to the office manager's being willing to discuss the personnel manager's advice. Both have an interest in the smooth running of the company and in compliance with the company policy: the personnel manager may be known to have top management backing: the managers have to go on working together, and therefore the office manager will have to consider the implications of rejecting the personnel manager's advice if employee relations are then seen to deteriorate.

Some key points to have in mind:

All managers negotiate - with each other, as well as with customers, suppliers, trade unions, and other outside parties.

Negotiation is about achieving a mutually acceptable outcome to a situation in which the parties involved initially have differing aims.

Negotiations are affected by the emotions and attitudes of the negotiators - not just by the logic of the arguments they use.

Consultation needs to be distinguished from negotiation. In negotiation, the parties accept that joint agreement is necessary; in consultation, one party reserves the right to act unilaterally.

Negotiators need to identify a top line objective - the best achievable outcome - and a bottom line - the lowest, still acceptable outcome.

Over optimism about the probable outcome is often linked to a failure to consider the bottom line. Top and bottom lines may each consist of several alternative permutations of the issues under negotiation. Possible outcomes need to be considered from the other party's viewpoint as well as one's own. It is important to retain credibility by restricting statements about 'final offers' or sticking-points to genuine bottom lines.

If possible, one objective should be to help the other party to feel satisfied with the outcome; but an aggressive or damaging claim has to be resisted with vigour.

In planning and conducting negotiations, positive attention should be paid to the duration of bargaining sessions, formal presentations, and individual contributions to the discussion.

A continuous session should rarely exceed two hours, a formal presentation 15 to 20 minutes, and an informal contribution two to three minutes.

Adjournments coincident with refreshments should be used to break a lengthy negotiation into two-hour segments. Adjournments should be used as powerful aids to negotiation by:

providing time to consider progress or new proposals

within the team and avoid snap decisions - bringing unconstructive or personalized arguments to an end

providing an opportunity for informal, exploratory talks between individual members of the two parties.

The purpose of negotiation is to reach agreement, not to score points in argument.

Effective negotiators are good listeners: they ask questions more often than they make statements. Humor, or good-natured banter, can be used to reduce tension and help create a bond between the two parties. It is important to look for verbal and non-verbal clues or signals of the other party's changes of mood or approach. There should be a concentration on issues or outcomes of common interest, rather than on the original differences.

The closer a negotiation is to agreement; the more sensitively the discussion should be handled. Periodic, jointly agreed summaries of progress can secure a phased agreement and prevent reversion to earlier argument. Proposals may initially be put as hypothetical suggestions. This makes it easier for both parties to avoid the pressure of immediate acceptance or withdrawal.

There is a positive advantage in making it easy for the other side to move, rather than challenging them on a win/lose basis. Proposals are best sold on their advantages to the other party, not to one's own.

Fear of losing personal or corporate face can severely inhibit progress.

Compromise should be seen as constructive, not weakness. In assessing the benefits of an agreement, consideration should be given to factors beyond the context of the immediate negotiation - such as the creation of useful precedents, and the quality of long-term relationships.

The final offer and agreement needs to be timed to coincide with a period of constructive discussion - and not be done during a combative phase.

It is important to achieve credibility for any statement about an offer's being final - the tone and style of such a statement may be as important as its substance. Devices can be used to break a deadlock in reaching agreement - such as promises of future negotiations on a related topic, or making the introduction of a new conditions subject to later review.

Before finalizing an agreement, check that all aspects have been agreed, particularly dates for implementation, review or completion; and definitions of terms. Ensure full understanding of what has been agreed through final summaries and by producing written confirmation. Unresolved issues should not be 'fudged' by producing vague or ambiguous forms of words in order to achieve apparent agreement.

An agreement is not successful until it has been effectively implemented.

It is often helpful to include an implementation program as an integral part of a negotiated agreement. An implementation program defines what has to be done, when, and by whom.

For some agreements, implementation may be best effected by a joint team.

Those affected by, or required to apply, an agreement (though not themselves involved in the actual negotiation) need adequate information and explanation. Such action should be based on defining who needs to know what, how, and by whom this information should be given, by what methods, and to what time-scales.

Face-to-face discussions are not the only form of negotiation: effective use can also be made of correspondence and the telephone.

An opening letter can help to set the parameters and style of later negotiation.

Dealing with all or part of a negotiation by correspondence may well save time, avoid an emotional confrontation, provide a record of the negotiation, and enable carefully drafted and complex proposals to be produced. Some negotiators are less resistant to proposals when discussing them on the telephone.

Telephone discussions may be used to settle minor or simple negotiating points extremely quickly.

Negotiations cannot be conducted through the media, but the media can be used to influence the attitudes of those concerned, as well as - where appropriate - public understanding and support.

The common characteristics of media communications of all kinds are accuracy, clarity, and reasonableness. Press advertisements offer full control over what is said, but their status as advertisements may reduce their credibility. Press releases provide initial control over content, but it cannot be guaranteed that they will be reproduced fully, or at all.

Press releases need to be written in the style of the media to which they are issued.

Journalists may be assisted or persuaded to write news stories. These may carry more public credibility than company statements, but incur the risk of error or distortion.

Radio or TV interviews should be seen as opportunities to put across a message in clear, simple terms, regardless of the precise questions asked.

• Commercial negotiations often differ from other forms of bargaining in that the two parties have no working relationship outside the issues under negotiation.

• Internal market negotiations should focus on the joint responsibility of purchaser and provider for the survival and success of the organization they both work for.

• The most common feature of commercial negotiations is buying and selling - often to produce a contractually binding agreement.

• In buying and selling, the balance of power frequently lies with the buyer who can choose to deal with an alternative source of supply.

• Consequently, business literature and training programmes concentrate far more on developing selling skills than on the expertise involved in buying.

• Sales techniques include the avoidance of direct competition by emphasizing the unique qualities of the goods or services being sold, an emphasis on the benefits of a deal to the buyer, and encouraging the buyer to make an immediate decision.

• General bargaining principles include an emphasis on careful planning, the trading of concessions, and the avoidance of impasse.

• Because most commercial agreements constitute legally enforceable contracts, it is important that they should be in writing, unambiguous, and founded on a basis of accurate information.

• Legal remedies for breach of contract include injunctions to enforce performance and also compensation for financial damages.

Although some people are better natural negotiators than others, negotiating skills can be acquired or improved by practice, coaching and training.

There are three main elements involved in improving one's negotiating abilities - knowledge, skills and attitudes. Effective negotiation demands a knowledge of the principles of the negotiating process, the context of the particular negotiation, and its detailed subject matter. The main types of skill involved are analytical, interactive and communicative.

Different approaches are needed to deal effectively with different types of difficult negotiations.

Negotiations are strongly influenced by underlying attitudes to the process itself, to the issues and personalities involved in the particular case, and by one's own self-perception and personal needs for recognition and achievement.

Planning to improve one's negotiating skills should be an element in most personnel professionals' personal development plans.


Mr. Nagel is the owner of a beautiful estate located 20 km far from Sibiu.

Alex Feeny came from the USA two months ago and now he is looking for a place to settle with his family. He met Mr. Nagel at a meeting last week. Mr. Nagel owns several estates and this one is worth buying. But he wants to deal directly with the person willing to become owner.

A. Feeny: Good morning Mr. Nagel how are you today?

Mr. Nagel: I am very tired as I have been looking for some agencies to help me with the sale. It costs a lot, so I do want to deal with the client and not through a middleman.

A. Feeny: I agree and I would like to talk with you about this. Have you thought of a price?

Mr.Nagel: Well, the estate is worth around 570 000$ but the price may be negotiable.

A. Feeny: It is a bit too expensive for me. Even if I am a businessman, I do think I cannot afford the price unless you drop it.

Mr Nagel: Prices here have skyrocketed lately and they are not leveling off.

A. Feeny: I can only pay 550 000 $ cash. If you agree then I can give you the money tomorrow.

Mr. Nagel: I agree only if you take into consideration the terms regarding the insurance of the house. You have to pay the installments in advance as I had already done this so far.

A.Feeny: I agree. I think we have to meet a notary and sign the papers.

Mr.Nagel: Therefore, we can see him at 9 tomorrow morning. I will bring all the papers and as far as you are concerned do not forget to have the money with you!

A. Feendy: I will. Thank you very much. You are a very nice person. My family is going to be very grateful to you as they enjoy this gorgeous land.

Additional Vocabulary:

to negotiate a loan- a negocia un împrumut

ongoing negotiations- tratative în desfasurare

negotiations in progress- tratative în desfasurare

joint- comun

joint bargaining- negocieri commune

joint owner- copropietar

joint management- conducere colectiva

outcome- rezultat, consecinta

to settle- a stabili, a solutiona, a reglementa

to claim- a pretinde, a cere, a revendica

to score- a înregistra, a nota, a marca, a obtine, a realiza

scheme- plan, aranjament, combinatie

damage- dauna, prejudiciu

to adjourn- a amâna, a suspenda

adjournment- amânare, suspendare, întrerupere

to adjust- a adapta, a ajusta, a corecta, a aranja, a pune în ordine, a aplana

adjustment- ajustare, potrivire, corectare, adaptare, aplanare, acoperire.

to involve- a implica, a antrena

involvement- implicare,participare

to enforce- a aplica, a pune în vigoare

enforceable- aplicabil

enforceability- aplicabilitate

enforcement- aplicare a unei legi

to bind- a lega, a încheia, a impune, a oblige, a se lega, a se oblige

binding- legatura

concession- concesie, recunoastere

to incur- a contracta, a asuma, a suporta, a suferi

to induce- a convinge, a determina la, a impinge la, a hotarî la

guaranteed- garantat

guarantee- garantie, siguranta

Topics for discussion:

1.How can you be successful in a negotiation?

2.Can you be persuasive with a client? In what way?

3.Are there secrets in communication?

4.How can you be inventive in negotiating a product?

5.What mistakes do you have to avoid?

Enlarge upon:

1.There is no failure, but results and only results!

2.There is no long lasting success without sacrifices...

3.There are of three kind of people: those who make things happen, those who look at things to happen, those who do not understand what is happening.

4.Keep close with those who win and avoid those who lose!

5.Never negotiate without being afraid, but never be afraid to negotiate!


Meetings have to be an efficient tool to assist us in getting decisions, information and action. We discuss, decide, decree, demolish. Sometimes they can take over our life. Some are efficient, others are not and for some of us they have even become a way of life. The objective of a meeting should never be to have a meeting. They are a means to an end, never an end.

If handled well, meetings can be invaluable tools for getting things agreed or discussed. Enjoyable meetings that are productive and help to get the job done are an ideal that becomes possible with a little effort. An unsuccessful meeting may do more harm than one which never takes place. So, the success is judged by the actions that result from it. And this is linked to running the meeting as the responsibility of the whole group not only the chairman.

There are many reasons to call a meeting:

briefing people

exchanging and evaluate information

negotiating a deal

making decisions

taking things through

solving a conflict

establishing a plan

We hold or attend meetings which serve a number of purposes. People have to be sure why the meeting is being held. Not only does the meeting need to achieve business but also people have to be satisfied that this has been done. Meetings are at the very heart of management. More and more time is spent in attending them. They can be inspiring, energizing and fun.

Sometimes meetings fail because of:

interruptions such as noisy rooms, mobile phones, messages, people arriving late.

lack of focus: irrelevant discussions

objective not achieved: decisions are not taken, people say they need more time.

politics motives are being brought in: confronting discussions

poor preparation: research has not been done properly.

poor chairing

poor environment: people crammed into a room, tables covered with tea and coffee cups and room for the papers.

poor timing: people arriving late, meetings starting and ending late.

right people absent: people with necessary input or information are not invited or not available.

unnecessary meetings: you need a quick decision

wrong people present: they can ruin a meeting.

What is important to know in a meeting:

* to clarify the purpose of the meeting

* to have meetings only if they are necessary

* to invite people who need to give approval, have the required expertise or information, have the creativity or intelligence to help the group generate ideas, will carry out decisions made, will support your issue, will be directly affected by the outcome.

* to send out a background information

* to create an agenda in order to give the start time of the meeting and location, list participants expected to attend, list issues, give the order in which they will be dealt with.

* to anticipate and prevent problems: problem people, hot topics, alliances and politics, support.

* the agenda can do half of your work before the meeting even starts: assessing items, standard items, have an order for the items, time each item, write the agenda.

* to chair the meeting carefully and well balanced: bring in quiet people, be open about input, stimulate a debate or discussion, listen actively, control discussions, gain agreement and approval by bringing discussions to an end, by letting people know it is time to make decisions or to agree, summarize different viewpoints, discourage interruptions, ask for a decision or consensus, make sure the quiet people speak up, take a vote if necessary.

* to satisfy the participants as well as the agenda.

* to consider that a compromise could achieve both completion of business as well as satisfying the participants.

* to be a good communicator by: making people feel good and value them and their opinion, getting them involved in the meeting, by showing you understand the way someone feels.

* to handle challenges by focusing on the issue not the behaviour or opinion of others, bring in others on your side, do not lose temper, give in and then raise the matter with a higher authority or at another time.

* to announce a finishing time, to limit the number of items on the agenda to the time allowed.

* to allocate a task owner to each item who will control the conversation and take responsibility for any decision.

* to summarize within items, at the end of them and at the end of the meeting.

Types of Meetings

Team Meetings

Consultancy and client meetings


I. Team briefing develops the team meeting into a management information system. The objective is to ensure that every employee knows and understands what they and the others in the organization do and why. Team leaders and their teams get together regularly to talk about issues relevant to them and their work. There are some benefits to team briefing such as:

* it reinforces management

* it increases commitment

* it prevents misunderstandings

* it helps to facilitate change

* it improves upward communication

II. Whenever you meet a client to present a proposal, however uncommercial the situation, something is being sold. So, the meeting will fail if the client's requirements are not defined adequately beforehand. Part of our job may be to help the client to clarify what he wants. So preparation becomes essential, a pre- meeting is useful to define the problem and agree the client's requirements as clearly as possible. First stage thinking has to be used to clarify what the client wants, before suggesting solutions. The following guidelines have to be used:

* create agreement with the client.

* identify the client's need.

* present your solution.

* explain the proposal in detail

* anticipate any objections you know the client has.

* restate the proposal by summarizing, discussing.

* keep discussion separate from your presentation.

III. Doing deals is a fundamental way to achieve goals; but it is a means not an end. A successful negotiation closes with everybody satisfied, the negotiator is delighted when the meeting creates genuine agreement. Once you recognized a meeting as a forum for negotiation we have established as adversarial situation. As a result, scoring over the opposition becomes an important strategy. The negotiation becomes an exercise in game playing: secrecy, bullying, hood-winking. So, this tacit agreement entails stress, wastes time and catastrophe may follow, new problems may arrive, commitment will suffer, promises will be broken, reputations will be bruised.

The responsibility will be to seek agreement: a specific plan of action to which all parties can commit themselves.

How to hold better meetings


Conflict is undoubtedly one of the most common sources of anxiety in meetings. Many meetings seem to collapse into argument, hostility and ritual recrimination almost as a matter of course. Do not regard conflict as inevitable or desirable. You are not powerless in the face of emotional hostility; but, in order to handle it well, you need to distance yourself from it.

Begin by trying to locate the source of the problem. Sometimes this is obvious: insecurity at a time of great change, stress, a new set of working relationships or pressure from public exposure. On other occasions, it may seem to bubble up from nowhere, starting with something small and escalating quickly as it takes hold of the group. Conflict thrives on confusion and doubt. Some group members may seek to manipulate it for their own ends or use it to justify their cynicism about all matters managerial. As conflict grows through a group, it becomes more emotional, generalized and unfocused. Looking for a target, it can find the Chair, turning the meeting into an all-purpose 'grouse session'.

Hostility often results from a sense of powerlessness. It is the feeling of being at the mercy of forces outside our control that is so disabling. This is why anger often centres on what has happened in the past, and in particular on what 'they' have done: senior management, other teams, department heads ,rogue operators' who have bucked the system, engineers or

sales staff who are never in the office, customers, suppliers, competitors. Be prepared. If you are facing conflict or group

resistance, you must give yourself a single overriding objective: to empower the group to do something practical. Only by focusing their thoughts on the future, and on what they can do

will you transform people's energy from conflict into purposeful activity. Arm yourself with a few guiding principles.

- Make the objective of the meeting clear at the outset. Write it up on a flip chart and be ready to refer back to it frequently.

Challenge people to explain the relevance of their remarks to the meeting's objectives.

- Remember that your task is to control the conversation.

Resist being drawn into the emotional maelstrom, however hard that may be.

- Slow the conversation down. Do not mirror the tone, pitch or speed of others' speech.

- Do not interrupt or cut people off in mid-sentence.

- Listen to the points people are making and display them openly on the flip chart.

- Do not be tempted to argue, or to contradict opinions or generalizations: about what 'they' do, or what 'always' happens. A good response to such remarks would be: 'In what circumstances?

- Turn complaints into objectives by asking people to restate them as 'how to' statements. Write these up on the flip chart and display them.

- Stop people from talking about others who are not at the meeting. Insist that 'they' are not here and we are, and that only we can address our objectives.

-Focus on solutions, not problems.

-Be a broken record! Repeat your questions to the group, over and over - 'What are we trying to do? What can we do about it? How does this relate to our objectives?'

Be specific. People should know what contribution they are being asked to make, and how their contribution will contribute to wider objectives. Being explicit about goals and targets is the only way to achieve this. If you genuinely consult - asking for suggestions, inviting people to participate in finding solutions -a great deal of resistance will melt away.

Focus on action. Draw the group's attention away from what others have done or are doing, towards what we will do in the future. You will have to be sensitive about this. Demonstrating that you understand people's grievances can be useful in winning them over to your own ideas; and in rooting out areas for improvement. However, there will come a point in a 'grouse session' when you should start asking, insistently but quietly: 'So what are we going to do?' In this way, you will divert attention from damaging 'storytelling' and complaint towards commitment and agreement. By showing that something can be done, you can show people that they have power to change things.


At the heart of any meeting is conversation. It is by conversing that we express our thinking and relationships to each other. If we want to improve our meetings, we must improve the quality of the conversations that take place in them.


Conversation is a verbal dance. The word, from Latin, has the root meaning of 'to keep turning with'. Conversation relies for its success on all participants moving.

Like any dance, conversation has rules and standard moves. These allow people to move more harmoniously together, without stepping on each other's toes. Different kinds of conversation have different conventions. Some are implicitly understood; others must be spelled out in detail and rehearsed.

This sense of a conversation is well expressed in the word 'dialogue'. The purpose of dialogue (from the Greek, 'meaning through') is to construct a new, shared meaning through conversation: a meaning that would not come into being if the conversation did not happen. We explore each other's perceptions, offer our own for examination and transform our thinking in the light of others'. This, at its very best, is what conversation can achieve.

Talking and listening

The dynamic of conversation involves two elements: talking and listening. These two activities do not happen merely in sequence, but simultaneously: each participant in a conversation is both speaker and listener throughout the conversation.

Most of us are better at talking than at listening. As managers, we are trained in the techniques of presenting, explaining and influencing. Our education mostly stresses the value of arguing: taking a position, holding it, defending it, convincing others of its worth and attacking any argument that threatens it. As a result, our conversations tend not to dance but to push and shove.

Adversarial thinking

In an attempt to impose order on our conversations, we have invented debate (from the Latin, 'to beat down')- Debate fosters adversarial thinking: a form of group thinking so common that, for many of us, it is the only way any group can think. Instead of enduring a verbal brawl, we set up a boxing match, in which ideas - preferably two opposing ideas - fight it out according to more or less strict rules. The idea left standing at the end is considered to be 'true'.

Much is made in management theory of the virtue of debate. It is said to be not merely unavoidable in business, but positively desirable: a recent article in Harvard Business Review calls it 'creative abrasion'. No less an authority than Peter Drucker has written: 'the understanding that underlies the right decision grows out of the clash and conflict of divergent opinions and out of the serious consideration of competing alternatives'.

By the rules of debate, if you prove the opposing idea to be wrong, you have somehow proved that yours is correct. This is clearly ridiculous: both arguments may be wrong; both may be partly right. Yet debate cannot allow us to consider these possibilities - or any others. A debate is a conflict of rigid opinions.

Opinions are ideas gone cold. They are our assumptions about

* what might, or should, be true rather than what is true in specific circumstances. They may take the form of:

- stories (about what happened, what may have happened,

* why it may have happened);

- explanations (for why something went wrong, or why we

* failed);

* justifications (for taking action or not);

* wrong making (I am right, you are wrong);

* gossip (to make us feel better at the expense of others);

* generalizations (to save us the trouble of thinking).

We are so used to voicing and listening to opinions that we can easily mistake them for the truth. Whenever you hear the word 'fact' in a meeting, you can be almost certain that somebody is voicing an opinion.

The overwhelming limitation of adversarial thinking is that it is destructive. The 'clash and conflict of divergent opinions' actually prevents people from exploring or developing ideas. They are too busy defending themselves, too frightened to venture from their corners, too battle-fatigued.

It is unusual for any meeting to avoid adversarial thinking. It

usually appears in one of four forms.

Critical thinking

For most of us, to think about something is automatically to look for something wrong with it. Take note next time you ask anybody for their response to an issue: invariably their first thoughts will be critical.

The rationale behind critical thinking is presumably that, by looking for the weaknesses in an idea, we can strengthen it. But we rarely receive criticism in this way; instead, we try to defend our idea from the criticism or attack the criticism itself, in an effort to discredit it.

Ego thinking

In adversarial thinking, we become identified with our ideas. Criticism of an idea quickly becomes an attack on the person holding it. Debate is used as a pretext for scoring points against others. Reason gets infected with emotion.

Meetings often devote enormous amounts of energy to preventing emotion from overwhelming debate, but the dynamic of debate makes emotional conflict inevitable.

Rigid thinking

All thinking starts from propositions about reality. Adversarial thinking merely pits these propositions against each other. It limits itself to their terms and their consequences: any thinking that questions the thinking behind a proposition, or strays beyond its boundaries, can be dismissed as 'irrelevant' (or 'deviant'). Indeed, the adversarial mode actually serves to entrench propositions rather than adapt or modify them. Rigid thinking is usually the result of:

* conforming to authority ('if senior management see it this

* way, it must be right');

* the influence of custom ('our profession has thought like

* this for the last two hundred years');

* habit ('this is the way we think around here');

* willful ignorance ('thinking like this saves us the bother of

* dealing with inconvenient detail or finding out more').

Political thinking

When ideas become identified with individuals, people realize that achieving action is a matter of aligning themselves with ideas, and with those promoting them. As rigid thinking limits the growth of ideas, propositions can only be attacked or defended. To attack an idea is to attack its sponsor; to support it is to create an alliance. We begin to use conversational gambits, ploys, manoeuvres and defence mechanisms, not to develop the conversation but to play politics: creating 'power bases' and undermining 'opponents', bureaucratic conniving, behind-the-scenes manipulation and rumour-mongering. We accord adversarial thinking enormous prestige. Managers

who can defend their ideas and withstand the onslaught of their peers - or, better still, their superiors - gain status and may be promoted on the basis of their 'strong character'. They become 'heroes' and the stuff of myth.

Adversarial thinking is self-perpetuating. Like other kinds of conflict, it is cyclical and can escalate easily. Being attacked for our ideas causes pain; we respond in kind and help to prolong the conflict. We may engage in 'pre-emptive strikes', attacking before being attacked. Adversarial thinking expresses our lack of security, and the need to protect ourselves from future threats.

Thus we become locked in a 'cold war' of argument and counter-argument. Although we may recognize that our behaviour is unproductive, we feel we cannot do anything different. We do not know how to; and we may be too frightened to

who can defend their ideas and withstand the onslaught of their peers - or, better still, their superiors - gain status and may be promoted on the basis of their 'strong character'. They become 'heroes' and the stuff of myth.

Adversarial thinking is self-perpetuating. Like other kinds of conflict, it is cyclical and can escalate easily. Being attacked for our ideas causes pain; we respond in kind and help to prolong the conflict. We may engage in 'pre-emptive strikes', attacking before being attacked. Adversarial thinking expresses our lack of security, and the need to protect ourselves from future threats.

Thus we become locked in a 'cold war' of argument and counter-argument. Although we may recognize that our behaviour is unproductive, we feel we cannot do anything different. We do not know how to; and we may be too frightened to

How, then, can we break out of the vicious spiral? What can we do to help meetings evolve beyond the fruitless and exhausting ritual of adversarial thinking? Perhaps the first step is to improve our listening.

The gentle art of listening

The quality of any conversation depends on the quality of the listening. Listening is far more than simply not speaking. The listener controls the speaker's behaviour by their own: by maintaining or breaking eye contact, by their body position, by nodding or shaking their head, by taking notes or doodling, and so on. Similarly, when we speak, we demonstrate the quality of our listening. If we interrupt, we demonstrate that we have stopped listening, that we are not interested in listening any longer. This, in turn, will affect the other's speaking and listening.

We all know the symptoms of poor listening. They are so familiar that we even expect them and develop tactics to cope with them. They include:

* outright condemnation of an idea;

* criticizing the speaker's delivery;

* only replying to a part of what somebody has said;

* interrupting;

* daydreaming;

* paying attention to a distraction;

* holding another conversation at the same time;

* evading the issue;

* using emotional words;

* going to sleep.

We are all able, however, to listen effectively. We listen well when we:

* like or admire the speaker;

* want to trip them up;

* think they have something interesting to say;

* expect to be rewarded or punished for listening well;

* know that we will be asked to comment;

* have an overwhelming need to listen;

* are not distracted;

* know or have learnt that effective listening improves group

behaviour and leads to improved results in the meeting.

The first step in improving our listening skills is to become aware of the obstacles. Some we will have control over; others we may have to endure.



Multiple conversations

Asking an irrelevant question

Changing the subject

Wandering off the point

Unfamiliar voice patterns

Ambiguity: double meanings, woolz use of language, jargon

Lack of detail in speaking

Speaking too long


Avoiding eye-contact

Looking bored

Sending the wrong signals: head-shaking, foot-tapping




Rustling papers

Misinterpreting behaviour

Cross-cultural confusion





Inappropriate use of authoritz

Personalitz clashes



Prejudice: race, gender, class, age, educational background

Cultural habits



Other people

Other meetings


Interruptions from outside

Technical interruptions: phones, bleepers, computer malfunctions

Poor ventilation

Fierce air-conditioning

Extremes of temperature

Uncomfortable furniture

Sitting too long

Inappropriately shaped table

Disability not accomodated

Conversation is the way we think together. What we say is what we think. We are paid to think. Our success depends on our results; we think when we want results that are better than they would be without thinking. And yet most of us are not trained to think. Thinking is not yet regarded as a key managerial skill. As a result, we have developed a number of damaging misconceptions about thinking.

Thinking is not an alternative to doing. We can use thinking as an excuse not to act; and we can act without thinking. The reason we do both so much is that we regard thinking and action as opposed. They are not. Effective thinking improves the effectiveness of our actions; and our actions are a rich source of good ideas.

Thinking is not intelligence. Thinking unintelligently may still achieve something. Intelligence without thinking is useless.

Thinking is not a function of education. Highly educated people are not necessarily good thinkers; and many people with little education can think extremely effectively.

Thinking is not being clever. An increase of knowledge is not thinking: it is simply hoarding. Too much information can seriously hamper our ability to think.

Thinking is not only the operation of logic. It involves looking, exploring, choosing, designing, evaluating and having hunches. It includes considering priorities, objectives, alternatives, consequences and other people's opinions.

There is a Japanese proverb: 'None of us are as smart as all of us.' Yet most groups of people think far less well than any one of them individually. Two main reasons suggest themselves.

1. We confuse conversation about the task with conversation about process. We identify thoughts with people. We talk in code. We use conversation to express loyalties or alliances, to bid for power, to protect our position or sense of self-worth. We persist in old conventions or habits of conversation to feel more comfortable.

2. We fail to manage the structure of the conversation. A well-managed conversation will begin with clear objectives and end with clear actions. Many conversations have unclear agendas (or hidden agendas); others are combinations of several conversations at once. We allow our conversations to ramble, to get stuck, to be hijacked or stifled. Because the behavioural or 'political' aspects of conversation are so powerful, we find it difficult to influence the course of conversations productively - particularly in a meeting, when a group of people are involved.

Tackling these two failings is critically important if we want to help ourselves and others to think better in meetings.

Thinking 'hats'

Serious conversations should seek to distinguish ideas from people. Edward de Bono's 'Six Thinking Hats' are becoming increasingly popular as tools for clarifying this distinction. De Bono suggests that we label every contribution to a conversation by means of a coloured 'hat' that the speaker is 'wearing' as they make it. Chairs can also ask participants deliberately to make contributions 'wearing' a particular hat. The six 'hats' are:

White hat: facts and figures. Red hat: emotion, feelings, hunches and intuition ;lack hat: caution, judgement, fitting propositions to facts.

Yellow hat: advantages, benefits, savings.

Green hat: creativity, new ideas, exploration, suggestions.

Blue hat: thinking about thinking, control of the thinking

process, 'points of order'.

The beauty of de Bono's hats is that we can put them on and take them off very easily. It would be utterly inappropriate to suggest that someone is a 'red-hat thinker' or a 'black-hat thinker'. Anybody can use the hats whenever they want. Indeed,

using the hats allows people to make remarks that they might not ordinarily risk making.

We can use the hats informally or systematically. Judging which hat to pick at which point can become a sophisticated chairing skill in itself. Consultancies now exist that train managers in the use of the thinking hats.

The two stages of thinking ,

We can imagine thinking as a process in two stages.

First-stage thinking is concerned with perception: we recognize something because it fits into some pre-existing mental pattern. We can call these mental patterns 'ideas'. Ideas are arrangements of experience in our minds. They allow us to make sense of our experiences; they are the means by which we have experiences. In first-stage thinking, we encode experience so that we can use it at the second stage. We name an object or event; we translate complex activity into an equation; we simplify a structure by drawing a diagram.

In second-stage thinking, we make judgements about our

experience by manipulating the code. Having named something

as, say, a 'cup', we apply logic, custom and aesthetics to judge

its effectiveness as a cup. Having labelled a downturn in sales

as 'a marketing problem', we use market research, spreadsheets,

past experience and critical scrutiny of the marketing depart

ment to judge how best to solve it.

Managing our thinking begins by:

- separating the two stages of thinking;

- becoming conscious of which stage we are in at any point; - applying only the tools and techniques appropriate to that stage.

We are highly skilled in second-stage thinking. We are taught it at school: we learn verbal and mathematical languages, we are encouraged to analyse, to deduce, to argue and to evaluate. So sophisticated is our second-stage thinking that we can construct computers to do it for us. We are so good at it that we regard it as the sum total of thinking. IQ (intelligence quotient) is a measure of our ability to manipulate language and symbols.

We are not nearly so skilled at first-stage thinking. We are taught virtually no techniques to help us improve our perceptions. Yet a change in our first-stage thinking can have dramatic consequences at the second stage. If we decide that the cup is not a cup but a trophy - or a vase, a mug, a chalice - our second-stage thinking about it will change. Our 'marketing problem' may actually be a 'product quality problem', a 'distribution problem', 'a personnel problem', a 'macroeconomic problem' or a subtle combination of all five.

Second-stage thinking is focused on results. First-stage thinking is not focused at all, and this makes us uncomfortable. Where second-stage thinking is 'deep', concentrating our attention on a single idea, first-stage thinking is 'shallow', scanning a wide area of experience. It creates anxiety because it delays the moment of deciding, forces us to suspend judgement and challenges our current way of seeing reality.

We prefer to take our perceptions for granted, but no amount of good .second-stage thinking will be effective if it is based on limited or faulty perceptions. Good thinking pays attention at both stages of the process.

The great Swiss psychologist, Carl Jung, developed the two stages of thinking into two sets of paired complementary functions: sensation and intuition at the first stage; feeling and thinking at the second. Jung himself used this model as the basis of a theory of personality types; it will be familiar to many managers as the basis of the Myers-Briggs type indicator.

First-stage thinking questions include:

1. 'What can we see?' (Sensation). 2.'What might it mean?' (Intuition).

Second-stage questions include:

1. 'What can we do?' (Thinking). 2.'What shall we do?' (Feeling).


to chair- a prezida

chairman- presedinte

to decree- a decide, a emite un decret

meeting- întrunire, sedinta

to call a meeting- a convoca o sedinta

notice of meeting- notificare a aunarii generale

to brief- a rezuma, a instrui

briefing- instruire, informare

briefing conference- conferinta de îndrumare

to exchange- a face schimb

to establish- a stabili,a institui, a întemeia, a instala

establishment- institutie oficiala, stabiliment,organizatie publica sau privata, fondare

timing- sincronizare

outright- deschis, cistit, total

outright loan to a project- împrumut direct pentru proiect

outright grants for research- alocatii integrale pentru cercetare

bias- eroare sistematica, distorsiune

disability- neputinta, incapacitate

disabled- incapabil de

to trigger- a declansa, a porni, a lansa

liable- raspunzator, supus

commitment- angajament

to reinforce- a consolida,a întari

reinforcement- consolidare

to share- a împarti

to share in- a lua parte la

to share out- a repartiza, a distribui

Topics for discussion:

1.How important is conversation in a meeting?

2.Which are the symptoms of poor listening?

3.What happens to a meeting if it is stuck on a problem?

4.How important is timing in a meeting?

5.What is adversarial thinking?

Enlarge upon:

*"Meetings will not improve by magic. People must want change and be willing to implement it."

*"Thinking is an alternative to doing".

*"A decision is committing to a course of action: choosing from among a number of alternatives and making a rational and emotional commitment to that choice."

*"Meetings are the very heart of management."

*"Getting agreement is easy. Getting everyone to confirm afterwards about what exactly was agreed is the hard part!"


Mr. Brown is the General Manager of "Imperial Industries", an important Company. He is attending the Annual General Meeting in a huge hall crowded with shareholders, all very excited. Mr. Crossly , the Sales Manager is going to preside the meeting.

Mr. Crossly: Good morning and I am glad you are here today.

He turns the floor to Mr. Brown who is impatient and ready to convince the audience with facts and figures.

Mr. Brown: We must be very pleased with the turnover of the company which has enlarged considerably. Even if we had to face a tough competition, I'm glad to tell you that we are highly appreciated on the domestic and foreign markets. We have fine, reliable products for the next financial year and we do hope to merge with other well known companies. One of them will be " T&T" Company in the South of Europe.

Mr. Monro, Marketing Manager for the "Liox"Company in Germany :

How did you succeed in spite of the unsuitable buildings? It seems to me almost impossible now that I have in front of me the figures.

Mr. Brown: It is true that the buildings are in a deplorable condition but we have updated machinery and highly trained staff. We are extending within an area of 4 square miles. The new location will cost a fortune but it's worth. New openings abroad are to be found and new funds are being expected.

Mr. Monro: I cannot agree with this. Until money arrives what is going to happen? Are you aware of this? How can you be so optimistic?

Mr.Brown: We are very prompt and efficient, promising and hard working.

Mr. Monro: But we talk about huge sums of money!

More and more excitement among those present at the meeting as they are shaking their heads...

Mr. Crossly: You need not worry because we'll manage to carry on our plan. The outlook is good, we have no unemployment, the output is high, we have good forecasts, the percentage of the business is the expected one.

Mr. Monro: Which are the export outlets figuring in marketing plans?

Is there any drawback to be expected?

Mr. Crossly: Mostly Eastern European outlets, and as far as drawbacks are concerned, I'm thinking of a depreciation regarding the dollar any time.

In the end there was a unanimous consent to wait for the further funds and for an outright loan.

Additional Vocabulary:

guidelines- directive

deputy manager- director adjunct

sales manager- director commercial

acting manager- director interimar

layout of a meeting- amplasare

to take charge- a-si asuma responsabilitatea

turnover-cifra de afaceri

merger- fuziune

outright loan- împrumut direct

outlet- piata de desfacere

slump- criza

funding- finantare

boom- avânt

long term- pe termen lung

medium term- pe termen mediu

short term- pe termen scurt

restrictive practices- practice anticoncurentiale

leveraged- îndatorat

divestitures- sciziune

to bail out- a salva

golden parachutes- compensatii financiare garantate

lay offs, redundancies- concedieri, disponibilizari

joint ventures- societati mixte

ailing- în dificultate

to spin off assets- a distribui activele

tender offer- oferta publica de cumparare

junk bond- obligatiune speculativa

corporate governance- conducerea înterprinderii

leveraged buyouts- preluarea controlului prin împrumut, cumpararea de catre salariati.

to bid- a face o oferta financiara

buyout- cumpararea unei firme în totalitate

E- Business for the Small Business

What is e-commerce?

All businesses exist because they serve a market. Successful enterprises, big or small, keep their customers by providing what they need. In a traditional business it means knowing your market, buying in the necessary raw components, combining them in your own unique way, pricing products to suit the market and distributing them efficiently. The final element is collecting the money. All of these stages take time to get right, not to mention the boundless energy. Unless you are very lucky indeed most traditional businesses take up to three years to show a profit on the bottom line.

What the new technology has done is to solve, for some businesses, two basic issues which until now have been major causes of early failure: cash flow and distribution. Using the Internet as your shop-front, you can ask for the money before you dispatch any goods or services to customers, thereby reducing your exposure. In some cases you may not even need to produce the product until an order is received. The second main benefit of a Web site is being able to reach potential customers on a global basis with very little marketing cost. This makes your break-even model completely different from making profits in a traditional business. You could be profitable within a few months rather than having to wait for a couple of years or more.

But e-commerce is also about the back end of the business. The side benefits of installing linked PCs, whether they are all hooked up to the Internet or not, include a more efficient business in terms of dealing with enquiries, product data and pricing issues. These benefits extend back into your relationship with your suppliers, in other words, obtaining and debt collection. If your suppliers are themselves on the Internet, that is even better. At the very least you will no longer need to write letters or send confirmations by mail for agreement. Just imagine how much time that would save for the average business. By linking your staff together using a company-wide 'intranet" (people sending each other messages on a private, company-only system) would abolish the wasteful practice of internal paper memos at a stroke. Decision making right across the company would be improved both in its speed and the discussion of any relevant issues.

Whenever you need to do some research, the Internet can provide access to information and market data which until now has only been available to big companies with big resources and big margins or to members of expensive trade associations. National statistics, trade trends, other people's prices and terms, new products, impending legislation, competitor details are all available, often at little or no cost. All you need is a little patience and skill in knowing how to search out such information on publicly available and often free Web sites.

History of the Internet

The Internet did not suddenly come into being overnight. The system has been in development in one form or another for more than 35 years. Understanding how it all started provides current users with a better appreciation of what it can do.

When did it all start?

The US Department of Defense was concerned in the mid-1960s that in the event of a nuclear war the armed forces would not be able to communicate with each other through the usual telephone networks. These networks relied on central control exchanges. Scientists argued that such control exchanges would be the first to be attacked in hostilities and therefore could never be the basis of a secure telecommunications system. So they proposed that new technology should be developed whereby messages could be sent directly from one party to another without having to go through an exchange. Each sending station or 'node' had equal status within the system. Messages would be packaged in electronic parcels and let loose on the network to find their own way to their destination through the most efficient route. If any part of the network were to be destroyed, the message parcel simply found an alternative route.

The principles of the new system were tested in the UK at the National Physical Laboratory in 1968 and then later developed by the Pentagon. The first node was a supercomputer based in UCLA (University of California at Los Angeles) to which four more nodes were linked in 1969. For the first time scientists were able to share computer facilities even though they were in different locations, by exchanging data between the five nodes. By 1972 there were 37 nodes in the network known as ARPAnet (Advanced Research Projects Agency net). The Internet today is largely a development of ARPAnet.

When was e-mail invented?

During the trial periods it was noted that scientists were sending each other personal messages as well as academic data and were exchanging ideas of a less formal nature. The concept of 'e-mail' was born. By the late 1980s the National Science Foundation (NSF), a US federal agency, had taken up the task of developing its own network for some government employees using the technology of the ARPAnet, sending messages via new, higher speed transmission lines. To distinguish whether the sender was an academic or from the government, 'edu' or 'gov' was added to the sender's network address. Later on other codes were developed to distinguish the type of user and were included in their electronic address.

How did the system become available to the wider world?

As other organisations acquired computers that could convert messages into packages to be sent electronically (and receive them back) new commercial networks were developed. It was then a fairly simple idea for some of these organisations to link up to create even wider networks. In time, computers bought for businesses and the home came with the necessary decoding programs to send and receive messages through telephone lines which were in turn linked to other networks through Internet Service Providers (ISPs). It has been estimated that over 200 million people are now connected to the Internet via their nodes (computers) and the numbers are growing each month.

Is the World Wide Web something different?

It can be confusing. The terms 'Internet', 'Net' and 'World Wide Web' are often used to mean the same thing. To be more accurate, the World Wide Web is the multimedia part of the Internet. The Web is the collective name for all the documents on the Internet that can be accessed through programs stored on your computer. These access programs are called Web browsers. In essence, the Web browser converts electronic information from other computers into displayed material that you can read or see. Anyone can create a document and make it available on the World Wide Web for other computer users to read. This displayed material is known as a Web site.

The importance of the Internet as a business tool

When you are running a business you need to grasp issues quickly if you are going to keep ahead. You may already be wondering from the description above what relevance such a system would have for you in your everyday business life.


The Internet provides the facility to send and receive written business messages through the telephone network. If you want you can set up your system to be available to receive messages on a 24-hour basis, which is important if you trade with overseas customers. You may want to place or receive an order late at night or during the weekend. Or you may need a rush order completed to help you meet a deadline for one of your own customers and you've missed the post. E-mail sends the message virtually instantaneouslv.

Data collection

Almost any type of information can be found on the World Wide Web. If you are not sure where the information is you can ask Internet companies called "search engines' to help you find it. If you know the name of the organization that has the information, you can visit its Web site from the comfort of your own office and print off or store in a file any parts or all of it without having to declare your identity.

Discussion groups

Sometimes in business, you just want to talk to someone who has been through a similar commercial experience so that you can avoid costly errors. Using the Internet you can join 'live' discussions on your computer monitor, often on a worldwide basis, and ask questions about your particular issue. You may want to know if there is a market for your products in a foreign country. Join a USHNET group or a news-group online and ask those people who actually live there what they think.

Long distance data transfer

You may need to send a 40-page document with complex diagrams to a potential client on another continent. If you mail it this could take days, possibly weeks to get there and even then there is no guarantee it will arrive in one piece. Using the Internet you can 'attach' the document to an e-mail and your client can print out the document on his or her own computer within seconds. Developments in the speed of data transfer mean that pictures and moving images can be sent by the same method.

The building blocks of e-commerce

Once you have realised the potential savings in time and expense which even average use of the Internet can deliver, you will be keen to get started. The process of getting online is not difficult, but as you will discover, once you are connected you may well have to change the entire way you do business.

Here are just some of the basic steps you will need to take to set up and develop your own e-commerce business:

• buy suitable computers;

• link them together;

• rent an extra telephone line(s);

• choose an ISP and go online;

• create a Web site;

•choose appropriate money collection and security software:

•decide what products you can sell online:

•think through sending products to overseas customers:

•be aware of any legal issues that may result:

•create a marketing strategy and business plan for e-business:

•consider how e-business will affect your existing trade:

•develop your database.

It looks like a simple list. From a mechanical viewpoint, it is. Some experts will tell you that they can get you online within a day but a Web site is not necessarily an e-business. Each step requires you, as a small business owner, to consider all the alternatives currently available if you want to achieve a profitable and sustainable business. It is not easy. The language suppliers use is often confusing as are the claims of speed, efficiency and suitability for your particular business.

Because the skills to help you develop e-commerce are all relatively new, the costs can vary enormously. Equally, because this way of doing business is so new, no one has all the answers. The advice from both start-ups and established players is to take each stage in sequence. Think through how you need to organise your staff to get the best results. It will be a frustrating as well as a rewarding experience, like all new businesses, so be prepared for some hard work.

Finally, do not be afraid to ask so-called experts to explain what they mean. The computer industry is probably the best example in the world of an industry that likes to cloud the issue. At times the jargon can be overwhelming. So do not suffer in silence. Get your new technology suppliers to explain in simple terms what the new piece of equipment can do specifically for your business. If you do not understand it you probably won't use it, so the investment will have been wasted. Remember that many so-called e-businesses are often nothing more than direct marketing operations that happen to take customer orders electronically. The vast majority of e-businesses still only use the Internet as a way to get enquiries or orders.

As you grow in confidence, so will your awareness of how products, particularly software, could enhance what you do. Use the Internet itself to ask for opinions and ideas. You'll be amazed how helpful other e-business owners around the world will be when you ask for advice.

From small business to big business

There is no doubt that the early years of the dot.com revolution have been littered with a number of high profile failures. Some of the losses have been spectacular. Such bad news has always been good news for the newspaper publishing industry - it is always much more entertaining for readers when things go wrong. But there have also been some remarkable success stories that have received less public attention.

Finding the right level of funds at the right time for a budding e-business on an ongoing basis needs to be planned for. It is likely that the funds will not come from the big banks as it has done in the past for most small businesses wishing to expand their business.

The current trading background for dot.coms

When two twenty something Cornell University graduates floated Theglobe.com on the New York Stock Exchange in the late 1990s the share price recorded the highest ever one-day rise on Wall Street - 606 per cent. Within 12 months the price had fallen by 9S.5 per cent and they were both replaced by a 50-year-old advertising executive.

The tale of high expectations followed by poor sales and dubious management has been repeated in the UK. There is even a Web site dedicated to tracking dot.com failures, although there are rumours, ironically, that this too may be having financial difficulties. The availability of investment funds seems to have receded in line with the absence of any real evidence of future profits. But it need not be the same for every dot.com business by any means. There are still many investors in the marketplace who are keen to back new e-businesses provided there is a convincing business plan.

Developing your e-business plan

Assuming you have a general idea that you are going to need more than you currently have in the bank to fund the development of your e-business, the first thing to consider is the main headings of expenditure over, say a five-year period:

• Salaries: list all the salaries you will need to pay including any secretarial help and the estimated outcomes of inflation.

• Benefits: add on all the salary-related extras like National Insurance, cars, expenses, travel, pensions, bonuses, overtime, recruitment fees.

• Marketing: allow for new campaigns and procedures, ongoing Web site development, selling aids, public relations, ASP software, trading licences.

• Distribution: postage or shipping costs, packaging, warehousing, dispatch, returns allowance, stocks and stocks unsold, insurances, taxes if applicable, percentage per country market.

• Central support: finance, legal, human resources, professional advice.

• Equipment: new office hardware, warehousing plant, buildings, cleaning, security, depreciation, servicing/leases.

The easiest way to approach this is to take your normal end-of-year list of costs as drafted by your accountant and complete a similar list for your new e-business. Depending on your market you may have other more specific costs without which you could not trade on the Internet or deliver your customers' orders. The next list is probably several tables showing what sales you expect to generate from various markets and at what margin:

• Sales from the traditional business: static, growing or declining.

• Sales from the e-business: speed of take-up, global markets.

• Sales from associates/affiliations/agents.

• Indirect sales from reciprocal site links.

This section will necessarily be estimated, but you should err on the side of caution and if possible give sound evidence as to why you think sales will be at the level stated within each category. It is quite possible that there may be no sales for some time, so you should come clean and say so. An overview of your intended market, with plausible-estimates of your share over the first five years, will help to add credibility to your claims that somewhere in all your figures is a viable business.

From this first pass through the planning stages you should be able to draw your own conclusions as to whether you think you have a viable business idea. If you do not believe it, neither will the investors. Case histories and anecdotal evidence may be the only third-party support you can get as to whether what you are proposing will work but it is worth compiling as there is unlikely to be any other market survey or industry statistics you could use to support your plan. Clearly the most important support you could receive for your plan would be future customers. Research could bring these out in the open, but do not rely too heavily on them as would-be customers can be notoriously fickle as soon as you ask them for money up front to fund your first year.

The business model

Once you have satisfied yourself that what you are attempting could actually return a sustainable profit, you need to articulate your business model in terms simple enough for a non-specialist to understand. You should also provide some evidence that you are ahead of the game in business terms and that your slant on the idea represents the way the market is going within your particular industry niche.

For example, the printing industry is already well advanced in most uses of the Internet so if you are in this field you may wish to highlight that you intend to do things using WAP technology. Or it could be that you supply archaeological site maps to academics but that you would supply them online as 3-D. all-around images. Whatever it is, it needs to add a new dimension to what already exists.

One of the main advantages of any business is its scalability. Could your e-concept be rolled out to many markets around the world, both geographically and across many industries? If so it stands a better chance of attracting development funds. You need to have worked out the estimated numbers of your market, both actual and potential, so that any backers can see the scale of the returns that are possible given the right level of investment.

How easily can your idea be replicated? If it can be, is there any way you can protect it through patents, licences, trading rights or special equipment to protect its growth over the first few years'? The technology needs to be bespoke whenever possible so that competitors will not be able to replicate easily what you intend to do.

Is there any way that you can persuade one or two strategic buyers to sign a letter of intent to work with you on an exclusive basis in the early stages? A useful way forward may be to give them some equity options in return for their use of your idea so that you will have at least one big customer even before you launch.

Another way to reduce the risk of early failure is to save cash by leasing rather than buying equipment and going for reciprocal marketing whenever possible rather than large scale brand-building. It goes without saying that excessive salaries and club class air tickets should not be "policy" in the first few years, if at all.

Do we really know who our competitors are and what they charge? It is not uncommon for a new e-business idea to be thought of at around the same time by several people around the world. There can be no copyright on an idea. The key thing is to get your idea to market as soon as possible and build volume. Attend seminars, go to exhibitions, read the trade press and start collecting articles about anything with even a remote connection to your big idea. At worst you could save yourself a great deal of time and effort if you discovered someone else had already done it. At best you might see a fatal flaw in the technical detail of your competitors' plan which could propel your idea into a world-beater.

Perhaps the most important aspect concerns the senior people who will take day-to-day charge of the business as it grows. They will need to be robust, know their industry, be well connected and get on well together as a team. When it comes to going for funds, the VCs (venture capitalists) will set great store by the maturity of the team and how they interact, as at the end of the day if there is a problem these are the people who are going to have to knuckle down and turn it around.

Finding the funds

There are many sources of funds for a business wishing to expand. In theory there is nothing special about e-businesses. The high profile stories about raising millions on the markets are really the tip of a very large iceberg and the vast majority of companies use the traditional routes to raise capital:

• friends and family;

• banks;

• private investors;

• VCs;

• government agencies;

• joint ventures with complementary businesses;

• customer equity partnerships.

Apart perhaps from the friends and family route, these sources will certainly want a detailed business plan and a defensible sales plan on which they can safely make a decision. All your assumptions need to be shown. You should also ensure that there are a number of 'safely factors' built in to the plan so that if things do not grow as fast as you said they would, you have an alternative scenario. Backers are never very keen on being asked for more money at some later stage when things go wrong, so getting your sums right in the first place makes good sense.

A further factor to consider is that your funding can come from a variety of sources: it does not all have to come from a single source. In fact the majority of e-business start-ups have a combination of private investors, founders money, local grants, some medium-term bank loans and perhaps one longer-term venture capital arrangement. Each of these sources will have different rates attached and different time-scales, so your cash flow plan becomes one of the most important business measures you will need to use in the first few years. Government support should not be sniffed at either. Often government agencies are very keen to have a local company "showing the way' to the rest of the business community and make it relatively easy for you to qualify for grants. Some can be as much as £250.000 or more, which for many c-businesses is more than enough to get you going in the right direction.

Venture capital

Of all the sources of funds, the largest will be either private investors known as "business angels", or VCs. Private investors may want less return and a longer payback period but may insist on some equity. They will be interested in how they could save tax from their investment, so you need to be prepared to be flexible as to how the investment is brought into the company. They are useful investors to have as they are generally the easiest people to go to if more funds are required at a later stage and are likely to have the least demands in terms of payback periods, if they are convinced you have a good idea.

VCs, on the other hand, tend to be very precise about what they want and when they want it. They will probably have a brochure explaining the type of businesses they want to be involved with and the type of funding they generally provide. They may specialise in start-ups or they may prefer to invest later in the cycle. They could introduce you to complementary business partners with whom they see synergies for your business. Or they might provide the missing technical or people management expertise to complete your senior team. You could do some initial research by logging on to the British Venture Capital Association to see the range of members they represent.

In general they will not be technical experts in your field but they have had a lot of experience of what works and what does not. So, when you are preparing your presentation to send them, you need to be as succinct as possible. Your accountant or solicitor might arrange an introduction to the three or four who would he most likely to look at your plan sympathetically. But unlike dealing with a bank, you are in the driving seat. The VCs will offer the finance if the plan stands up as viable, so you need to consider carefully each offer you receive and choose the one you think can add value to what you are doing. All of them will be looking for high returns within a three to five year period, so the relationship will not go on for ever, but it would be better to take the funding from people you get on with rather than sacrifice good business empathy for a few less generous terms.

The VC presentation

If your idea is attractive to the VC they will want to meet you and perhaps one other member of your senior team and have a presentation from you about your e-business. Meetings are normally scheduled for an hour or so. You need to be brief and direct. This is not the time for waxing lyrical about how you started your business 20 years ago in a garden shed. You need to plan your presentation carefully to leave yourself enough time to go through the basic idea and the figures in your plan. No more than a dozen laptop images will be required to get the main ideas across.

In this first session they will give you an opportunity to ask them questions, so prepare what you need to know beforehand and make a careful note of the answers, as you may need to compare what they say with what other VCs tell you. If all goes well you will be invited back for a longer discussion with perhaps an industry expert sitting in and more people from the VC. This session is to help them get a clearer picture of your depth of thinking and for you to see if you could work with the VC on a medium term basis as they will probably want to put one of their own consultants on your board and may even insist that they chair it to protect their investment.

The deal

Depending on the amount of money required, the VC will attach a range of terms and conditions to any funding offered. It will include the percentage of their equity, which will be based on their initial valuation of your new e-business. It will also include how much of the debt you need to repay on an ongoing basis and what happens if you default on any payments. These terms may change if after due diligence they find that your plan is not as watertight as they thought. So, if there is anything negative within the plan or perhaps a market change, you should declare it as soon as you can.

Becoming a dot.com millionaire

Typically, if things go well, your initial funding of, say. £1 million will have been enough to get things going. But a year or so later you find that you need to establish the brand on a national basis to get the real returns. So, you may need to go back and ask for £10 million.

Two years later the business model is working well in the UK hut you see an opportunity to expand the concept into Europe, so you go back and ask for £30 million. The stage after this could well be a flotation or IPO (Initial Public Offering) after which you may well realize all your initial equity and become a dot.com millionaire.

Topics for discussion:

1. Do you think E- commerce is being destined to become a big business?

2. What is the E revolution about?

3. Which are the advantages and disadvantages of the E commerce?

Enlarge upon the following:

"Within the E- business environment the journey from your first networked computer to your first million could be a very short step."

"The challenge is one of constant change and tuning to the new. If you can work these new changes into your unique e- business idea to gain the competitive edge, you stand to increase your chances of success...until another advance is made. Dealing with those changes will not be easy. But no one ever said running a business would be easy."

"Your business model should bring you sustainable profit".

Translate into English:

1.Îti trebuie bani pentru a demara o afacere? Bine-înteles ca îti trebuie. Multi? Depinde de specificul fiecarei afaceri, dar nu e greu de aflat câti anume- nu trebuie decât sa pui pe hârtie toate cheltuielile strict necesare si sa vezi ce iese. Te poti trezi cu o surpriza foarte placuta: poti sa descoperi ca banii de start nu constituie o problema chiar asa de mare si ca e posibil sa demarezi o afacere de care te vei putea bucura.

2. Orice succes porneste de la mintea omului si nici o decizie nu poate fi mai buna decât informatiile pe care se bazeaza. Exista oameni care fac lucrurile sa se întâmple, apoi cei care pivesc asteptând ca lucrurile sa se întâmple si cei care nu înteleg ce se întâmpla.

3. Aceste investitii au fost facute cu un scop: pentru a se crea conditii bune de munca iar astfel randamentul va fi mai bun, dar si pentru imaginea firmei. Sediile companiilor trebuie sa fie dotate cu sali de conferinte, cu computere si acces nelimitat la internet, cu mobilier ergonomic.

Negocierea se bazeaza pe principiul câstig- câstig, ambele parti având de câstigat în urma discutiilor. Flexibilitatea ne va ajuta sa nu capitulam în fata unor cerinte pe care nu le acceptam la început. Vom continua pentru a câstiga, vom tine cont si de nevoile celeilalte parti.

Se recurge la manipularea interlocutorilor pentru a ne îndeplini scopurile. Într-o lume ideala ar fi minunat daca n-ar trebui sa renuntam la nimic pentru satisfacerea nevoilor nostre, dar pentru ca acest lucru nu este posibil, renuntam la ceva pentru a obtine altceva în schimb.

Exista câteva lucruri în care cred persoanele care au success, ca de pilda : nu exista esec, ci doar rezultate, lucrurile nu se îmbunatatesc din întâmplare, ci numai în urma unor actiuni adecvate, succesul cere sacrificii, oamenii reprezinta resursa cea mai importanta, iar ceea ce faci trebuie sa fie util cuiva indifferent cât de bine este facut sau cât effort s-a depus.

Pentru directorul general, angajatul perfect este cel interesat de clienti si care încearca permanent sa îmbunatateasca serviciile companiei. Daca îti pasa de angajat, vei fi în afaceri pentru totdeauna. Trebuie sa-ti aduci mereu aminte ca ei, clientii sunt cei care îti platesc chitantele iar cei care reusesc sa se concentreze asupra clientilor sunt de fapt angajatii perfecti.

Prin onestitate, siguranta, inteligenta, inovatie, flexibilitate vom evolua. Pretuim inovatia, pentru ca modul nostru de a gândi este revolutionar. Chiar si atunci când suntem pe un drum batatorit îndraznim sa redescoperim noutatea si valoarea. Eficacitatea si pasiunea pentru servicii a fiecaruia dintre noi sunt conditii cerute de orice companie.

Compania Augsburg are un pachet larg de beneficii si indemnizatii, ce include, subventie pentru transport, masina de serviciu pentru cei din management, abonamente la o clinica medicala, preturi reduse la produsele firmei. Dorim sa-i fidelizam si sa-i stimulam pe angajatii firmei si sa completam oferta salariala.

Comertul electronic mondial are o dinamica ascendenta pe masura ce tot mai multi consumatori si tot mai multe afaceri se conecteaza la web. Principalele bariere în dezvoltarea comertului electronic ramân problemele legate de securitate si încredere. Pe masura cresterii utilizatorilor casnici de internet, procedurile legate de autentificare si criptare a datelor personale primesc o importanta tot mai mare si succesul comerciantilor de pe web depinde de succesul implementarii.

Obstacolul principal pentru o dezvoltare mai rapida este cel financiar. Romania este o tara cu constrângeri bugetare, iar varianta testarii unor solutii la nivel mic, precum si luarea unor decizii de extindere a acestora este destul de potrivita acum.

Translate into Romanian:

A truly effective client- service plan will include a set of activities that will help professionals to know the client's business better and in a more organized way. A good client service plan will include activities meant to deepen the business relationship by expanding the amount of client contact.

Business requires decisions: frequent, fast and often without much idea whether they are right or wrong. When a business consistently outperforms expectations, there is at least a good chance that it can be multiplied by ten or a hundred times. In these circumstances most people settle for modest growth. Those who seize the day become seriously rich.

In a firm which relies mostly on firmwide or group rewards, all the partners or owners share the consequences if an individual's performance is down. Accordingly, other professionals have a direct incentive to take steps to help that individual or group improve either formally through practice group leaders or informally through the efforts of fellow partners.

You do not need to be a high tech business to benefit from the Internet. The best success stories have been the more traditional businesses that have found new ways to do business by using the basic technology currently available. Like all new business you need to use your common sense and plan for profits on a gradual basis. But unlike traditional businesses the process of building e-commerce profits will differ both in scale and in the type of markets available. The more aware you are of what is likely to happen with your new e-commerce venture, the more sensible your decisions will be.


Boundless- nemarginit

Bottom line- de baza

To dispatch-a trimite, a rezolva rapid, promt

Cash flow- flux monetary

To draft- a redacta, a întocmi

To exchange- a face schimb

Web browser- program software pentru navigare pe internet

Joint venture- societate mixta

To display- a expune, a afisa

Impending- imminent

Expenditure- cheltuiala

Allowance- reducere

Scalability- capacitate de a grada

To hook- a prinde, a agata

Hook up- program comun, înlantuire

To knuckle down- a se apuca de

Tip- informatie

Secure- în siguranta, care nu prezinta risc, garantat

To secure- a proteja, a asigura

To store- a stoca, a memora

Ongoing- neîntrerupt

Backer- sustinator,girant

To back- a sprijini, a sustine, a gira,a da îndarat

To back down- a o lasa mai moale, a bate în retragere

To err- a gresi, a face o eroare

To bud- a începe

To litter- a murdari

Fickle- nestatornic, capricios

To highlight- a evidentia

Claims- cereri, revendicari

To comply with- a se conforma

Encasement- încasare, plata în numerar

Rental- valoare locativa

Obsolete- demodat, învechit

Would be customers- clienti potentiali

In sequence- în succesiune, unul dupa altul

Venture capital- capital de risc

Venture- speculatie, risc,actiune comerciala

Watertight- ireprosabil, impecabil, clar

To default- a fi în restanta, în întârziere cu plata

Diligence- osteneala

Due- cele cuvenite

To slant- a denature,a prezenta tendentios

Slant- punct de vedere, opinie, înclinatie, tendinta

Onerous- apasator,împovatator



WE WOULD ALL LIKE to have loyal clients who come back to us year after year. Clients who treat us as valued professionals and seek our advice on their most important issues and problems. Clients who don't shop around each time they think about buying our services, who come back because they will always get fresh perspectives, insights, and ideas from us and because they trust us. Clients who will enthusiastically recommend us to others even if we aren't serving them at that moment.

Reflect for a moment on your own client relationships. If you're like most professionals, you may have a few loyal clients who have drawn you into their inner circle of advisers. They consult you on a broad range of issues and wouldn't dream of using a competitor to provide your service.

Others, though, are just buying your expertise-they use you because you have specific knowledge and skills that you deliver at a competitive price. The next time around, however, these same clients may very well turn to someone else. They view you as a commodity.

Somewhere in the middle, there are those bread-and-butter clients who keep asking you back, year after year, but never seem to let you get very close to them. You may have worked for them for years, but your influence and the scope of your work is limited; and although they feel some loyalty to you, it's not enough to prevent them from switching to someone else if they see a major economic benefit.

Do you wish you had more clients who would draw you into their inner circle?

Do you sometimes feel you're treated like a vendor instead of a respected professional?

Would you like to compete less on price and more on the value you can add?

Is it getting harder to differentiate yourself from other professionals in your field, be they other management consultants, lawyers, or accountants?

If you answered yes to some or all of these questions, we wouldn't be surprised. The fact is, most professionals are on a journey-defined by the role they play with their clients- and few have finished it. When it begins, you're an expert for hire who offers information and expertise to your clients on a transaction basis. Further along, you may earn the right to be a steady supplier, and you'll be asked back repeatedly. When you've reached the final and most rewarding stage, you'll become a trusted adviser who consistently develops collaborative relationships with your clients and provides insight rather than just information. At this stage you will have breakthrough relationships. Because of the broad, influential role that you play and the unusual degree of trust that you develop, these relationships will be of a significantly higher order than the run-of-the-mill associations that so many professionals have with their clients.

This developmental journey-from expert for hire to trusted adviser-is the focus of what we mean by studying about clients in general. From extensive research, there is a client-validated model for success-a roadmap of the specific characteristics that underlie extraordinary performance with clients-that will help you establish and sustain more of these enduring, advisory relationships.


The abiding client relationships not only bring us immense personal and professional satisfaction, but in fact they make our careers. Unfortunately, the conventional wisdom about how to develop them and achieve professional success is woefully inadequate.

"Do good work, act with integrity, and the rest will follow" has been the time-honored prescription for individuals who sell and deliver services.

"Find an area to specialize in, focus on it, and make your name there" could be added to it.

Clients today are highly sophisticated, educated, and informed buyers who select professionals from increasingly competitive and mature service industries. In a world of continual corporate cost-cutting and almost unlimited information, institutional buyers have less loyalty to suppliers than ever before. Studies have shown, for example, that over 50 percent of executives who switch providers say they were "satisfied" with them before switching. And though specialization is important to a point, the corporate leaders say that most of the highly specialized professionals they deal with are incapable of advising them on broader business issues. You have to do far more, in other words, than "satisfy" your clients and do a "good job" if you want to create long-term loyalty and enter into the collaborative relationships that allow you to have a major impact on your clients and their decisions.


There is a simple observation the telephones of some professionals we knew never stopped ringing-clients called them, rather than vice versa. At the same time, we saw others treated like vendors by their clients: these professionals were constantly challenged on price, and they often struggled to get new business through laborious RFPs (requests for proposal) that eliminate practically all human contact during the client's decision-making process. Was the difference just that the former worked harder, I were smarter, and did higher-quality work? These were the obvious reasons, and while certainly relevant, they did not provide anything near a satisfactory explanation for the intense client loyalty we observed. After all, we also knew many smart, hard-working professionals who were not able to develop so many loyal clients. Clearly, these qualities were necessary but not sufficient.

We must set out, then, to comprehensively research and answer a series of fundamental questions: Why do some professionals manage to develop long-term relationships and become trusted business advisers to their clients while others get called in on a one-off basis like commodities? What qualities do leaders look for in the professionals-in fields as diverse as law, consulting, finance, and technology-whom they bring into their inner circle? How do clients define value?

The starting point may be fifty years of combined experience in advising senior managers in many organizations around the world. People went well beyond their own personal experience, however, and spoke at length with the present and past leaders of dozens of major corporations, such as Kodak, BellSouth, Cox Communications, Motorola, American Express, Citibank, Eli Lilly, and General Electric, listening as these chief executives shared their lifetimes of experience in buying services and seeking advice from professionals. Such interviews were eye-opening, and they debunked many of the widely held notions about why clients value certain professionals over others.

What could strike us was the dissatisfaction many clients expressed about the outside professionals they engaged and by the difficulty they experienced in finding truly objective individuals to help them resolve their most important issues.

A number of well-known advisers who counsel and consult to leading executives and politicians, as well as many less-known but high-performing professionals who face the same day-to-day challenges that we all do in trying to build client relationships are ready to be interviewed.

Some of the greatest advisers in history, such as Aristotle, Thomas More, j. P. Morgan, George Marshall, David Ogilvy, and Henry Kissinger are always asked to be studied.

It is not easy to identify the essence of what it takes to become an extraordinary professional and consistently provide value to clients. There are some attributes and attitudes that will enable you to develop your own breakthrough client relationships.

The meaning about clients for life has several distinct connotations. The first is literal: how to develop lifetime clients-or at least long-term ones-when such a relationship is mutually beneficial for the client and the professional.

Second, is figurative because in some cases a continual relationship may not be practical, realistic, or even desired. A client, for example, may need the ongoing services of an accountant every year for many years, whereas he might call in a management consultant or executive recruiter only once every four or five years. A few professionals may also choose a transactional model of serving clients, where they work on specific issues rather than on a retainer basis (the law firm Wachtell, Lipton, Rosen & Katz, for example, successfully adopted this approach in the early 1970s). Even a transactional strategy, however, will succeed or fail based on having repeat clients.

Clients, thus, can be attitudinally loyal for life-they remember us for having done an outstanding job, they call us back if they ever need our particular service again, and they enthusiastically recommend us to others.


We define a professional as someone who practices an occupation requiring a high degree of education and training, and who has clients rather than customers. This definition includes not just service professionals, but also technology consultants and sales executives who sell a complex product. It does not include teachers or musicians, for example, because they don't have individual or organizational clients the way consultants and accountants do.

The professionals used as examples are drawn from a variety of fields, including consulting, law, accounting, advertising, finance, medicine, sales, and the military. Although each profession has specific skills and knowledge that its practitioners must master-consumer behavior for an advertiser, financial reporting requirements if you're an accountant, contract law if you're a lawyer, and so on - achieving client leadership is premised on a set of common factors that transcend individual professional requirements.

All types of professionals-and their clients-can benefit from long-term relationships. These relationships give you the opportunity to engage in extensive client learning, which greatly increases your ability to offer tailored solutions, develop new ideas, and provide germane insights rather than generic platitudes. They are also the proving grounds where you can expand your service offering and therefore your professional experience-a loyal client who trusts you will try you out in areas that a new client wouldn't let you touch.

Finally, the positive financial impact of having even just a few lifelong advisory relationships, if they are managed profitably, can be enormous.

The distinction between a client and a customer is more than semantic.

Customers, for example, buy a product or service with well-defined characteristics that match their needs, with little or no negotiation and discussion between buyer and seller; the professional's relationship with a client, in contrast, has a consultative aspect to it-there is give-and-take to clarify needs, identify problems, and recommend solutions. While there doesn't have to be a personal relationship between a customer and the seller of the product or service, with a client there is typically a close, personal relationship with a high degree of trust.

And finally, a professional offers a client an authoritative body of knowledge and expertise. So while the customer can have it his way at Burger King, a client taking tax advice can't always have it his way (unless he wants to get into trouble with the IRS).

The focus on clients, therefore, is a deliberate one. If you have customers, your relationships will tend to be narrow in scope, whereas if you serve clients, you have the opportunity to develop the collaborative, broad-gauge relationships that are the focal point.

A different approach is required for sophisticated clients who buy complex products and services. For example, although we may believe that the customer is always right-a standard prescription for managing customers-we sometimes have to tell our clients how they are wrong and why we disagree with them.


There are three types of professionals to be taken into account.

The first group includes service professionals-lawyers, management and technology consultants, accountants, corporate bankers, financial advisers, executive recruiters, advertising executives, and so on. These individuals are in an ideal position to become broad-based business advisers to their clients: their services are of high strategic importance to their clients, and they are intimately involved in the sale and delivery of the service. If you are one of these professionals, all of the material in this book should speak directly to you.

The second group consists of sales executives who want to be considered business consultants rather than simply salespeople. If you sell a complex product or service that is critical to your client's business, such as telecommunications systems, computer equipment, power plants, or mission-critical software, your client will have a significant need for advice and consultation, and the opportunity exists for you to become an adviser to him rather than just a salesperson.

Finally, there are professionals who are staff or functional managers within corporations. Human resources or finance specialists who report to line executives, for example, face the same challenges that outride professionals do in creating value, and they are held back by similar barriers.

It's interesting to look at some extraordinary professionals who have consistently engaged clients for life, identify how they add value, and discuss the barriers that prevent other professionals from achieving the same level of success, to grasp core attributes of great client advisers-the ingredients for success with clients-and provide specific suggestions for how you can cultivate these qualities, to see the major pitfalls that professionals can fall into as they develop and manage client relationship.

Virtually all of the large service firms endeavor to develop advisory or consultative relationships with their clients, emulating those very few-McKinsey in consulting, for example, or Goldman Sachs in investment banking-that have a history and culture of building deep relationships. Stockbrokers are now "financial advisers"; accounting and consulting firms aspire to advise senior management, not just undertake reengineering projects; software programmers are referred to as "consultants"; and companies like Reuters don't just sell databases but want to be your "information adviser." Often, however, the words "adviser" and "consultant" lack substance and have a hollow ring to them.

Ironically, just at a time when the professions are experiencing their greatest growth in history, just as so many are striving to become trusted advisers, many clients are in fact dissatisfied with the quality of the advice they receive and the attitude of those who give it. It's getting harder and harder for them to find professionals like James Kelly and Nancy Peretsman.

Why then? What holds professionals back from an undeniably attractive role that is highly valued by clients?


Three barriers stand in the way of becoming a business adviser to your clients, and of experiencing the client loyalty and professional fulfillment that accompany this role:

1. Most professional service firms demand specialization. If you work for a large consulting or accounting firm, you might become a reengineering expert for the chemical industry or an auditor for automotive companies. This is fine for starters, but the problem is that the more expert you become in the niche where your company has placed you, the more "valuable"-at least in the short term-your firm thinks you are. This becomes a disincentive to providing you with other experiences.

While there is great benefit in developing a deep expertise, this specialization will eventually become a liability if you want to play a broader-gauge role with clients. Some firms recognize this issue and try to address it by systematically diversifying the experience of their junior staff, but many do not. (This push for specialization, by the way, is pervasive not just in the business world but in medicine, academia, science, and other fields.) In addition, while large firms provide tremendous opportunities and training for young professionals, they also have financial and growth goals that must be met (many are now publicly held companies). Sometimes, these short-term pressures override the long-term process necessary to build deep, trusted client relationships.

2. Expertise is becoming automated and reduced to a commodity. Ironically, while service professionals have been major beneficiaries of the late twentieth-century information economy, there are now signs that many types of expertise are losing value. Just as the industrial revolution replaced skilled craftsmen with low-wage factory workers during the early nineteenth century, the "expertise" sold by professionals is becoming easily replicable, more widely available, and increasingly cheaper in our Internet-speed, technology-driven economy. Already, the average incomes of some classes of professionals-doctors, for example-are starting to decline.

Several forces combine to diminish the value of expertise:

• The supply of service professionals is growing significantly. The historically rigid controls on the supply of graduates have been relaxed, and many individuals with lesser certifications (e.g., paralegals, physicians' assistants) are doing the work formerly entrusted to degreed professionals such as lawyers or doctors.

Price based competition has become a permanent feature of the market for professional services. In the corporate world, most major contracts for professional services are now competitively bid, and the competition (for management consulting and advertising services, for example) can be ferocious.

The internet and expert software now provide unparalleled access to all kinds of expertise, at far lower prices than ever before.

Market research reports that used to cost thousands of dollars or that investment banks provided only to their big-spending corporate clients can now be obtained free over the Internet. Increasingly, professionals are paying to have their "expertise" put in front of clients. A new Web site for CEOs, which already has the participation of big names such as Michael Dell of Dell Computer Corporation, is charging professional firms $50,000 for the privilege of putting their articles or research up on the site.

In other areas, Web-based sales automation is reducing the need for expensive sales forces; and millions of consumers use inexpensive software like TurboTax to do their taxes and even write wills, thus avoiding tax advisers and lawyers.

Labor mobility among knowledge workers is increasing. U.S. firms, for example, are tapping into pools of English-speaking talent in countries such as India, South Africa, and Australia. Law school graduates are crossing over into adjacent fields, such as consulting and investment banking.

The effects of these trends are readily apparent. In fields as diverse as law, accounting, consulting, and technology services there is significant consolidation occurring, with new mergers being announced almost monthly. What used to be the "Big 8" accounting firms are now the "Big 5." Law firms, which historically enjoyed long-term retainer relationships with their clients, are being asked to bid competitively for work; some even went out of business altogether in the 1990s, and we are now beginning to see a growth in mergers as law firms consolidate. Consulting firms are being asked by major corporations to submit breakdowns of their cost structure, their partner-to-associate ratios, and their billing schedules so that the profitability of their projects can be managed and reduced. Many companies are now conducting frequent, tough reviews of their advertising agencies, forcing incumbents to continually justify their relationship.

These and other signs of intense competition and industry maturation are now widespread. High-end services, such as merger and acquisition advisory work, may never become commodities. But just as we can now put a vacation out to bid on the Internet to see which airline wants to sell us a ticket at the best price, we believe the day is not far away when this will be done for services as well. Imagine asking doctors to "bid" to conduct a routine surgical procedure or inviting lawyers to compete for your estate planning business.

3. Many professionals are held back by stereotypes about what clients want them to be and how they should behave. Here are typical statements we have heard from these professionals:

• "My job is to provide answers."

• "I need to become as expert as possible in one specific subject area within my field and then to make my name in it."

• "When I meet prospective clients, I need to demonstrate my expertise. After all, that's what they're buying from me."

• "If I work in a new industry or function, I will be ignorant of basic concepts. I will add little value, and clients will reject me."

• "This is a professional, business relationship. The personal side is separate. Furthermore, my loyalty is to the greater goals of the institution, not to the individual."

• "Clients will take advantage of you. You have to stick up for your own interests."

There is some validity to all these statements. They are incomplete, however. In contrast, consider these comments from clients who have spent a lifetime using professionals:

• "The really good professionals ask great questions. Often, they enable solutions rather than supply them."

• "The best business advisers have a good understanding of my industry, but also breadth.. Some of the best insights I have gotten have come from professionals who bring analogies from other fields."

• "Good professionals are great listeners. They hear what you mean, not necessarily what you say."

• "It's very tough finding 'honest brokers" who are unbiased and not pushing their own agenda with you. Everyone walks in here wanting something."

• "Investment bankers cannot be true advisers. They are too focused on the deals."

• "Our consultants always end the session with a half-hour presentation on 'next steps,' the execution of which cannot, of course, be accomplished without the consultants. What I really value instead are working sessions which advance our thinking."

• "Our lawyers focus on every detail with equal emphasis. That's OK to a point, but they rarely pull back and help us see the big picture."

Many professionals, in short, focus on providing answers, being perceived as "experts," doing great analysis, and specializing more and more during their careers. Clients, in contrast, seek professionals who can ask the right questions, provide knowledge breadth as well as depth, demonstrate big-picture thinking as well as analysis, and listen rather than just tell.

Professor J. Brian Quinn of Dartmouth's Amos Tuck School of Business, who has spent nearly forty years advising business and political leaders, including several U.S. presidents, puts his own slant on the issue of stereotypes: "I used to believe that solving the problem was paramount. In reality, when the good advisers deliver their recommendations, most of them have already been implemented. I realize now that the process of problem solving is more important than the solution."

Clients do value professionals who can play a broad advisory role. Theodore Sorensen, in his book The Kennedy Legacy,

reports that just a few days before his inauguration, John F. Kennedy was presented with a list of 250 items requiring a decision from him. He apparently blurted out, "Now I know

why Ike had Sherman Adams!" (Adams was President Eisenhower's trusted adviser). The fact is, clients at any level, whether they are presidents of nations or corporate managers, appreciate someone who can help them put there issues in perspective, solve problems, and make better, faster decisions.



There are seven key attributes that, when blended together in the right quantities and in the right manner, facilitate the development of insight and the formation of deep, trusting relationships. These characteristics are a blend of innate talent, acquired skill, and attitude, and it's pointless to try to determine exactly which is which. That's why we use the more general term "attribute" to describe them. Empathy, for example, is definitely something you develop at a young age (a "talent"), yet we know that people can improve their empathetic ability late in life. Native ability certainly counts, but hard work and openness to change can improve any of these qualities, an assertion borne out by the experiences of the many great professionals we've studied.

There is a natural, logical progression to the development of these attributes and to the order in which they usually come into play in building an advisory relationship. The two foundational attributes for any professional who aspires to serve clients are selfless independence and empathy. Great advisers have an attitude of complete financial, intellectual, and emotional independence. They balance this independence, however, with selflessness-they are dedicated, loyal, and focus on their client's agenda, not their own. It is a fine line to draw: on the one hand, being responsive to a client's needs and problems and, on the other, maintaining objectivity and honesty at all times. This selfless independence illustrates why clients are different from customers.

The second attribute, empathy, is what opens the door to learning. Empathy fuels your ability to discern a client's emotions and thoughts, and to appreciate the context within which that client operates. It enables you to diagnose what the problem really is and later underpins a learning relationship with your client. Dr. Michael Gormley, a London-based physician and renowned diagnostician who treats several members of the British royal family, provides an apt medical metaphor when he tells us, 'You can't just chop the patient up into little pieces and then examine each one of them under the microscope. You have to understand the whole context of his daily life."

The next three attributes concern your ability to think and reason. You simply have to have something valuable to say before you can develop the long-term professional relationship. A passion for learning drives the professional to develop a core expertise and then to become a deep generalist by continually broadening her knowledge. Synthesis is the ability to see the big picture, to draw out the themes and patterns inherent in masses of data and information. It includes related skills, such as critical thinking and problem solving. The ability to synthesize sets the business adviser apart from the subject matter expert who relies mainly on analysis. Judgment is often-but not always-the culmination of a particular engagement or advice session, drawing on all the learning and synthesis you have undertaken.

Conviction and integrity constitute two important character attributes that are common to all of the extraordinary professionals we have studied. When credibility of content has been established, trust can follow, and the depth of a client's trust in you will be very much governed by his assessment of your character.

Conviction comes into play as the adviser begins to offer opinions, recommendations, and judgments in earnest. Conviction, however, does not exist in a vacuum; it is based on a set of compelling, explicit personal beliefs and values. Properly harnessed, it is a powerful force that can motivate and energize both professional and client.

The attribute of integrity comprises a constellation of skills and behaviors that build trust, including discretion, consistency, reliability, and the ability to discern right from wrong. Without this trust, it is unlikely you will develop a collaborative relationship. Your client will always keep you at arm's length and treat you like a supplier.

There are other qualities, of course-motivation, optimism, tenacity, determination, analytical skills, and so on- that are valuable for professionals and indeed necessary to be a successful expert. The seven we have identified, however, are the ones that truly stand out and make a difference in a professional's effectiveness. They enable you to go beyond expertise and become a broad-based adviser. These are the qualities that foster the development of the insights and relationships that lead to consistent value creation for clients, and they are the characteristics that great advisers themselves have intuitively developed. If you want, in short, to become an extraordinary professional who commands unwavering client loyalty, you need especially to develop and strengthen these attributes.

Becoming an Integrated Professional

These attributes build on and interact with each other to create a whole that is greater than the sum of the parts. Casual observers might call an individual who has successfully integrated them a "seasoned professional" or someone who really "has a head on her shoulders." Drawing on his thirty-eight years as a successful client adviser, James Kelly articulates this state of integration and its benefits:

"I have come to accept that I am constantly learning, and will never, ever know it all. I've learned to become an intense observer of people-I know that situations are never quite what they seem at first. I accept that sometimes I'm wrong, but that's the cost of intellectual boldness, of daring to be right. I have a constant sense of being surrounded by expert resources that I can call on-they're everywhere. When you get your ego out of it and allow yourself to relax and observe, you really do get into the flow of events and ideas. I'm working for my clients, but I'm also feeling quite independent from them-I'm driven not because I'm being paid but by a desire to help my clients, to learn, to satisfy a higher purpose. The ideas and solutions come quite freely in this state.

This happened just last week-I was the last speaker at a three-day conference for a group of top executives. When I was younger, I would have prepared a canned speech days in advance. This time I listened intensely for the first two days. I observed the participants carefully. I opened up my mind to the variety of ideas that were being presented and discussed-even though I didn't like some of them. On the third morning, I got up early and took out a pen and paper."

Characteristics of a Successful Client Adviser

• Clients often ask you for advice, both on subjects directly within your field of expertise and in peripheral areas that happen to be of concern.

• Most of your client relationships are long-term ones. The vast majority of your clients would enthusiastically recommend you to someone else.

• There is strong mutual trust, on a professional and a personal level, between you and your clients.

• You collaborate extensively with your clients to define the product or service you deliver to them and match it to their needs.

• You frequently approach your clients with unsolicited ideas and suggestions.

• Your clients believe you consistently deliver value in excess of your fees. They rarely if ever shop around to see if they can get the kind of services you offer more cheaply elsewhere.

THESE BUILDING-BLOCK attributes are fundamental and straightforward. The reality, however, is that most professionals don't practice or actively develop them. Or they delude themselves into thinking that they have already mastered them. Often, what they think passes for insight is, to their clients, merely expertise. They forget that this year's insight has a very limited shelf life and can quickly revert to simple expertise-debt underwriting and reengineering consulting used to be value-added services, for example. Now they are virtual commodities.


Consultants, attorneys, bankers, accountants, and other professionals are involved in high-risk, high-stakes decisions every day: Should the case go to trial or be settled out of court? Should a microchip manufacturer invest another 1 billion dollars to increase production capacity? Do the company financial statements represent the actual condition of the business? A keen judgment is one of the most valuable asset a professional can have. Few clients, for obvious reasons, go back to a professional whose judgment is poor. Many of the executives we have interviewed, in fact, remember all too clearly the poor judgments offered by some of their advisers, even though the incidents occurred years ago.

Good judgment, in contrast, is invaluable to clients. Win Bischoff, chairman of the British merchant bank Schroders, recalls a seminal decision he made and how the accurate judgment of his adviser contributed to Schroders' international success:

It was in the early 1980s, and we felt we needed tore-capitalize our U.S. bank, which engaged in commercial lending. We were convinced we could issue debt to do this. I went to see the head of Warburgs [a major British merchant bank], David Scholey, to seek advice. In the space of an hour he delivered an unequivocal set of judgments. Issuing debt would be all but impossible, he offered, quickly turning the conversation to the topic of Schroders' overall strategy, and the need for us to assess it in detail at this critical juncture.

We were already considering undertaking a strategic review, and Scholey's advice was important encouragement. We subsequently made a series of important decisions, including eventually selling the U.S. bank instead of recapitalizing it, as well as making other strategic choices that enabled us to prosper as an institution.

That short, singular conversation, and the rapid-fire but incisive views provided by Scholey, became a significant influence on our thinking.

Instinctively, Scholey did several things when asked to advise Schroders. First, he made a rapid, intuitive judgment about the feasibility of issuing debt. The situation fit a pattern in his experience, and he knew what the answer was without hesitating. In the process, he thought two or three steps ahead, and was able to visualize the chain of events following a hypothetical debt issue by Schroders, and the negative consequences that could ensue. In effect, he helped Bischoff avoid a potentially bad judgment. Second, he reframed the question Bischoff was asking. The right question wasn't "Should we recapitalize our American bank?" but "Should we be in the U.S. banking business at all?" Since that time, Schroders' market value has increased fifteen-fold, from about $300 million to $5 billion today.


Before we look at the specific practices that allow great professional advisers to arrive at high-quality judgments, we have to understand how to avoid bad judgments. First, bad judgments can be deadly for an organization; second, they will ruin your reputation as a professional-your clients will never forget the poor decisions you recommend; and third, it's very common to make mistakes of judgment, since so many factors can cloud our decision making. The fact is, avoiding bad decisions is one-half of the battle: even if you don't make particularly good ones, you can muddle along and survive, whereas a poor judgment can put you out of business, for good. The exceptional professional, therefore, constantly examines his client's thinking and behavior to help prevent these wrong turns.

Here are five of the most important judgment traps that professionals should be aware of as they advise their clients:

I. Weak Premises: Starting Out on the Wrong Foot

Many clients approach a problem or decision with wrong or partial facts at the outset, resulting in a chain reaction of faulty thinking. The two most common errors that bias clients are anchoring-the decision maker allows himself to get "anchored" on a specific starting number-and availability, the tendency to use the most available, recent, or vivid information.

If two real estate appraisers, for example, are asked to assess a house that is already for sale, their valuations will vary based on what selling price they're given. The appraiser who thinks the house is for sale at $200,000 will assign a lower valuation than the second appraiser who is told it's on the market for $250,000, even though it's the same house. Where you start often determines where you end up.

Clients can get anchored in many ways. Incumbent corporations in deregulated industries like telecommunications and utilities, for example, often get anchored in their old growth paradigms. Compared to their historic growth rates of 3 percent or 4 percent a year, achieving 5 percent or 10 percent now seems wondrously high. But the new standard, in order for a company to be considered a "growth" business, is more like 15 percent annual growth. Because many of these companies are anchored on the old standards, they end up being acquired.

Whatever happens to be the most available, recent, and vivid data can also bias us. This perception bias can operate when managers go out and talk to just a few customers and then draw sweeping conclusions about their company's products and positioning. Bad personnel decisions are often rooted in this judgment trap-we sometimes pick people we already know for a job rather than the most qualified candidate.

2. Confirmation: Seeing What You Want to See

Many people start out wanting to confirm-consciously or unconsciously-what they already believe and tend to ignore subsequent evidence that contradicts their beliefs.

The confirmation trap is often triggered during mergers or acquisitions. Some years ago, two large professional service firms decided to pursue a merger, which, if completed, would have resulted in large financial payouts to management. A subsequent study commissioned to assess the cultural compatibility of the two companies pointed out very major differences in the two cultures, and an unbiased observer would have concluded that the organizations were virtually incompatible and shouldn't merge. Some partners who read the report, however, came to the opposite conclusion-that there was a strong cultural fit. They ignored the differences that the study cited, or reframed them as "strengths" that would actually aid the merger. As a result, the two firms went through significant post-merger trauma as their different cultures clashed, resulting in bitter conflicts and an exodus of partners.

3. Overconfidence:

Underestimating What It Takes to Succeed

Overconfidence is probably the most common and fatal judgment trap. In his book, When Giants Stumble, historian Robert Sobel chronicles famous business blunders by major corporations. He sums up by saying, "If there is any single moral to the tales [about corporate failures] it is that for all but one of these entities failure was preceded by great success." Business success, Sobel cautions, can breed overconfidence and complacency.

Clearly, the Decca record executive was suffering from a major case of over-confidence (and maybe incompetence as well) when he so brusquely turned down the Beatles. A famous historical example of overconfidence is Germany's invasion of Russia during World War II. Adolf Hitler, buoyed by easy victories over Poland, France, and other European countries, became filled with hubris as the war progressed. He then ignored the warnings of his generals and insisted on invading Russia nearly a month too late. His armies were virtually destroyed by the combination of the severe Russian winter and the unexpectedly large number of Russian troops that Stalin was able to mobilize.

Several other classic judgment traps that are related to overconfidence include an over-reliance on rules of thumb and a misunderstanding of base-rates. Rules of thumb include "When writing an ad, use sentences of no more than twelve words," or "Summer is the best time of year to sell your house." We tend to simplify our experiences and reduce them to easy-to-remember rules and guidelines. Problems arise when these cherished rules just don't apply. For example, Long Term Capital, a hedge fund manager, had leveraged $160 billion worth of securities with just $4.8 billion in capital (the underlying value of the derivatives was estimated at$l trillion). The company bet large sums of money that the yields on twenty-nine-year government bonds would converge with the yields on thirty-year bonds-something that had always happened in the past (this expected convergence was a "rule of thumb"). In July and August of 1998 the yields actually diverged and Long Term Capital lost virtually all of its capital, nearly causing a global panic in the process.

Misunderstanding or ignoring the underlying statistics regarding an event is also common. For example, most studies on the success of corporate acquisitions demonstrate that 50 to 60 percent of acquisitions are considered failures within five years. The figure is even higher for cross-border mergers, which only succeed 30 percent of the time. Yet many executives pay no attention to these sobering statistics.

4. Prior Commitments: Making New, Inappropriate Commitments Based on Previous Ones

Prior investments or decisions can unduly influence the formulation of new commitments: once we take a stand or position, we often resist changing our mind. This phenomenon may explain why President Kennedy gave the go-ahead for the Bay of Pigs incursion-it was already planned, organized, and ready to go when he was elected. Companies frequently ignore an analogous rule of finance-don't consider sunk investments when making new ones-and they mistakenly pour good money after bad.

In his classic book Influence: The Psychology of Persuasion, Robert Cialdini cites many examples of how even very small prior commitments can induce level-headed individuals to agree to things that make no sense. In one study, for example, homeowners consented to have large billboards encouraging traffic safety installed on their front lawns, simply because they had previously agreed to put a small sticker bearing a similar message in the corner of a window!

5. Groupthink: Believing That It's "Us Against Them"

The author Irving Janis, in a book entitled Groupthink, identifies eight symptoms that can distort judgments and behaviors. These include:

• An illusion of invulnerability, which leads to excessive risk taking

• An unflinching belief in the morality and Tightness of the group

• Stereotyped views of adversaries as either evil or incompetent, and therefore not worth dealing with

Corporate organizations often suffer from groupthink, and it can lead their managers to make poor judgments.

When Mexico deregulated its long-distance telephone market, for example, several large U.S. telecommunications companies entered the Mexican market believing they could easily dislodge the national phone company. They held its management in disdain and considered it a stodgy, unworthy competitor. To their surprise, they sustained heavy losses as the national company beat them at every turn with innovative marketing and pricing strategies.

During World War I, this attitude resulted in the slaughter of tens of thousands of soldiers in Turkey. In The Broken Years: Australian Soldiers in the Great War, Bill Gammage describes the first Australian soldiers who went into action at Gallipoli: "They thought themselves the equal to twenty Turks, they bowed to no man, and with the eagerness of children they restlessly awaited their glory." Within nine months they had suffered appalling casualties and were forced to creep away in defeat.

How to Avoid Bad judgments

You need to be constantly vigilant for signs that your client is about to fall into one of these judgment traps. Do you see a client using rules of thumb that are shopworn and outdated? Has your client already made up his mind and just wants your stamp of approval? Do you have clients who rush to judgment based on too much "intuition" and too few facts, or who grossly underestimate what it will take to succeed?

Here are some specific actions you can take as an outside professional to help your client avoid lapses in judgment:

• Always vigorously challenge your clients' assumptions. What makes their starting number right? What would justify a number that was 50 percent less or 50 percent more? Do their customers really only buy on price? Do their products really have the highest quality? Introduce as much contradictory information as you can and ask lots of "discontinuing" questions whose answers might undermine the initial premise.

• Keep yourself up-to-date on key statistics and research in your field-remember, there's a lot of folklore out there. Beware of accepted wisdom: the "dogs of the Dow" stock-buying strategy, for example-popular for many years with investors-has worked poorly during the last five years. (This popular investment strategy involves buying the ten stocks in the Dow Jones Industrial Average with the highest dividend yields during the previous year; holding them for one year; and then going through the same selection process again for the following year, picking a new group of ten).

• Be careful how you ask and frame questions. "Do you feel the market is saturated now?" is a leading question; a better phrasing would be "What is the market potential?" Many professionals ask questions that are biased and reflect what they think or what they feel their clients already believe.

• Try to identify independent thinkers who can help challenge your clients' thinking. These can be outside speakers, for example, or perhaps mid-level managers who see the need for change more clearly than top management does.

• Finally, don't ever let yourself be used simply to confirm something a client already believes-your collusion may help undo the client. An assignment like this may help out with short-term bookings, but it won't build your reputation as a professional with integrity and an independent point of view. (The exception would be the case of a legal advocate who commits to demonstrating the truth of her client's story in court).


What is sound judgment and how does a professional develop it? We are concerned with a definition of judgment that is the ability to arrive at opinions about issues; the power of comparing and deciding; good sense.

The elements that contribute to sound judgment can be expressed in a formula with three basic parts:

Judgment = (Facts) X (Experience) X (Personal Values)

The facts about the issue at hand-too few and you'll be hip-shooting, too many and you'll risk overanalyzing the situation-represent the first major input. Experience, which fuels intuition, is the mechanism by which the adviser adds to and processes these facts. Good decision makers then filter the resulting options through a strong set of personal beliefs and values.

Historically, good judgment was associated with age and experience. The elders in a society were considered the wisest, and therefore they were consulted on the most important decisions. Today, there are several, contradictory schools of thought on what constitutes good judgment and decision making. Most researchers in the field embrace the cognitive model and believe that solid judgments can only be reached through a highly logical, step-by-step, rational process, focusing almost exclusively on the factual inputs described in our judgment formula. Many popular books have been written that propose this approach, and they're filled with elaborate, quantitative tables and charts, which decision makers are supposed to use in order to come to sound conclusions. Unfortunately, research into decision making in the real world clearly demonstrates that good decision makers rarely undertake this much rational analysis.

Another, smaller group of scholars believes that judgment is essentially intuitive, and that most real-world decisions are made with little analysis. Based on our own research into professionals and the clients who employ them, we believe that the best decision makers blend these two approaches-cognitive and intuitive-and they add a third dimension, which is the personal value system.


Great professionals excel at a number of specific practices that underpin sound judgment. They:

• Frame problems appropriately at the outset

• Engage in creative but selective fact gathering

• Use intuition: they leverage their personal experience to find similar patterns and relevant analogs

• Filter their judgments through a clear set of personal beliefs and values

• Are honest enough to learn from experience

I. Frame the Problem

The first critical step is to identify the right problem and frame it correctly. Diagnosing the wrong problem is one of the most common mistakes that professionals make, regardless of their field. Many corporate executives will ask consultants to help "reorganize," when the real problem-for example, ineffective communication or poor leadership- often has nothing to do with organizational structure.

Professor Joseph Bower of Harvard Business School, who actively consults to industry leaders, told the following story about problem framing, or rather, reframing:

"The head of a large company called me in to advise on a major revitalization program that he wanted to launch. He had identified a host of problems with his organization structure, distribution network, technology platforms, and so on. He was also going to engage a large consulting firm to help with the effort. I sat in on the kick-off meeting with the CEO and his fifteen top executives. For two hours the CEO waxed eloquent about the need to change, and the new program he was about to launch. There was little discussion, and the meeting ended. Afterward, I sat with the CEO and he asked me for my reaction. I looked at him and said, "Did you see the faces in that room? There isn't one of your top executives who buys into your program. I think that's your real problem." Initially, he was stunned, but then he nodded his head. He began to smile. "You're right," he said quietly. "They're not on board at all, are they?"

Ironically, that was the end of the consulting assignment for both me and the large firm he had lined up. In his mind, the engagement had been a success and was over. The real problem had been identified and he set to work fixing it, personally. The consultants were a bit stunned, but to me it was a good outcome. The CEO subsequently replaced half his senior team with outsiders, and they went on to be quite successful."

2. Engage in Creative but Selective Fact Gathering

Horserace handicappers use historical data on horses to set the odds for each race. In a classic study, a group of professional handicappers was asked to make predictions for various races. In the study they were given increasingly more facts about each horse and then, after absorbing the new batch of facts, asked to predict its performance. For the first round, they were given only five facts on each horse; for the second round, ten; the third round, twenty; and finally, forty pieces of information on which to make a judgment. What happened? After each round, the handicappers' confidence in their judgments increased. But their accuracy stayed the same! After a minimum threshold of key facts is reached, having more information does not increase the quality of decision making. In certain business situations where time is of the essence, gathering more information can actually decrease the quality of decisions because key actions are delayed as managers conduct more and more analysis.

While somewhat counterintuitive, the idea that more information and expertise isn't always helpful has been born out in a variety of settings. In our largest corporations, for example, the careful review and analysis of decisions by large numbers of internal staff experts and external professional advisers often decreases rather than increases the quality and robustness of decision making. This may happen because excessive analysis screens out promising creative ideas that do not stand up to the scrutiny of traditional financial benchmarks.

3. Use Intuition to Leverage Facts and Personal Experience

Intuition is a powerful tool for making judgments. Just look at this example: a fire chief leads his men into a house where a kitchen fire is burning. It is a relatively small fire and shouldn't be a problem for the half-dozen trained fire fighters arrayed to put it out. Suddenly, the chief has a terrible feeling about the fire. Without thinking, he orders his men to evacuate immediately. They rush outside, and as they leave the house, the entire first floor collapses in an explosive inferno. They have just escaped with their lives. When a postmortem is done on the situation, the chief believes that his "sixth sense" perceived the danger and saved him and his men."

Researcher and author Gary Klein, who studies decision making under pressure, recorded this case, and he knows that it wasn't the chiefs extrasensory perception that saved the day (Klein's book Sources of Power examines how people make decisions in real life as opposed to the laboratory). Using innovative interview techniques, Klein reveals the real reason: the chief's experience-based intuition. The fireman sensed that, even though the fire was small, it was generating an unusually large amount of heat. Furthermore, there was very little noise-it was too quiet for such a hot fire. In fact, what had happened was that the basement was on fire, and what seemed like a kitchen fire was actually a huge basement conflagration leaking upstairs. Subconsciously, the chief compared this fire to similar fires in his experience. It didn't fit established patterns, and this set off warning bells. He knew something was wrong-he didn't know exactly what yet. So he ordered a retreat to reexamine the situation from a safe vantage point.

The example of the kitchen fire illustrates the first key component of intuition: the subconscious analysis of 'patterns. We often experience it as "good feel," but a better description would be "experience feel." After we have seen many, many similar cases, we develop an ability to sense whether a new example fits-or diverges from-the patterns we have come to recognize. Chess grandmasters function very much the same way. They spend most of their time studying games and positions, and they develop the ability to rapidly size up any situation they encounter on the chessboard. As you can see, developing your powers of observation, a theme we highlighted in the previous two chapters on learning and synthesis, will help sharpen your judgment skills. In order to leverage your experience, you have to cultivate the ability to observe intensely what is going on around you.

The second step in using intuition involves imagining how the decision will play out. Various researchers use expressions like "mental simulation" or "imagining the outcome" to describe this. Very skilled professionals can rapidly simulate scenarios in their minds. Bain & Company CEO Orit Gadiesh implicitly refers to this when she tells us: "The good client advisers always keep three or four moves ahead. They are constantly imagining steps two, three, four, and five of the process while their clients are still focused on step one."

The intuitive part of judgment also involves the ability to identify analogs-to be able to say, "This here is like that over there." Analogies are also an important tool for synthesis. Here, we are trying to use analogies to make better judgments, to enhance our understanding of the immediate decision we have to make. American military advisers during World War II, for example, might have foreseen the attack on Pearl Harbor if they had studied the history of the Russo-Japanese war. In that situation, the war was also preceded by a Pearl Harbor-like attack on the Russian fleet at Port Arthur in 1905.

4. Incorporate Your Personal Values and Standards

Good judgment, or at least judgment that is consistent with your own character, is also based on having a strong, explicit set of personal beliefs and values that guide your decisions .

The following story, told by the chief executive of a $2 billion company, illustrates the power of an adviser's personal value system. You may not agree with the values, but you can't argue with the result:

"Some years ago, we faced a class action suit from a group of dealers, which potentially was going to cost us $50 million. We believed we had done nothing wrong, but our lawyers advised us that if it went to court, we stood only a 50-50 or worse chance of winning. A major distributor, who used to be the chairman of my company, originated the suit. He had died just shortly after the suit was filed, and on his deathbed he had his sons swear they would not relent in their pursuit of the lawsuit.

One of my long-standing advisers is a minister who excels at taking principles from the scriptures and applying them to business problems. I explained the situation to him, and he gave me this advice: he told me to go see the sons of the major distributor (who had just died) and tell them that we were donating $200,000 to a charity of their choice "to honor their father." "He was the founder," I was to tell him, and "this is to honor him." I did this, and they accepted. Then my adviser told me to go around and personally visit each distributor who was a party to the lawsuit. He told me to ask them what their issues really were and what they needed. I spent six weeks traveling to see them. At the end of this, I offered to settle for something like $2 million over three years.

Eventually they settled for $1 million up front. This advice saved the company tens of millions of dollars and helped reestablish the loyalty of our key distributors."

The pharmaceutical company Merck's development of Mectizan, a drug for river blindness, is another example of how a clear set of personal values can and should influence business decision making. In The Leadership Moment, Professor Michael Useem of the Wharton School of Business chronicles the story of Roy Vagelos, who was the head of Merck's laboratories in the 1980s. Vagelos made a personal decision to support development of a revolutionary drug that could cure or forestall the spread of river blindness, which is caused by a devastating parasite infection affecting 60 million people in developing nations. The problem was that none of the customers for Mectizan could afford to pay for it.

Vagelos advised Merck's management committee, and later, when he became CEO, its board of directors, to support the production and distribution of Mectizan-for free, forever. This was a huge and risky decision that by 1997 cost Merck $200 million in lost income. Yet Vagelos never hesitated. A physician himself, he deeply espoused a personal mission to "preserve and improve human life." His own beliefs and values were carefully factored into his decision making.

5. Don't Be Misled by Your Experience

On November 23, 1951, Ivy League rivals Dartmouth and Princeton played a hotly contested football game. The game was marked by fierce rivalry and very rough play on the field. Princeton's star player broke his nose and a Dartmouth player broke his leg. Afterward, a bitter dispute erupted about the way the game was played, with each side accusing the other of unsportsmanlike conduct. A psychologist from Dartmouth, Albert Hastorf, and a researcher from Prince-ton, Hadley Cantril, teamed up to study the incident. They surveyed students who had seen the game, and they showed a film of the game to students at both colleges who had not attended the match. Predictably, each side reported that the other team had committed the most infractions. Even with the benefit of objective evidence-a film that recorded everything-the students couldn't agree. The researchers concluded, "It seems clear that the 'game' was actually many different games. It is inaccurate and misleading to say that different people have different 'attitudes' concerning the same 'thing.' For the 'thing' simply is not the same for different people."

As this example illustrates, although it would seem very natural for us to learn from experience, memories are "reconstructed" after the fact and sometimes not very accurately. Researchers in the legal field, for example, have found that eyewitness" accounts can be very unreliable. In short, we lend to see what we want to see.

Physicians can be particularly susceptible to this phenomenon. A study done many years ago asked a group of experienced doctors to assess who among 500 children needed tonsillectomies. They concluded that about 50 percent needed to have their tonsils removed. They then separated out the 50 percent whose tonsils were deemed healthy and asked another group of doctors to examine them. Again, just under 50 percent were deemed in need of surgery to remove their tonsils. The "healthy" children were again culled from this group and assessed by yet a third group of doctors. Incredibly, nearly 50 percent were still diagnosed with unhealthy tonsils requiring removal!

There are three major pitfalls that prevent us from learning from experience:

• We claim credit for all successes. Not all good things are due to our genius; luck and happenstance affect a lot of outcomes. We have to recognize this and develop a measured understanding of our capabilities.

• We minimize and dismiss failures. Often, we will reframe events with hindsight so they are more favorable to us, or we simply forget them. This keeps us from learning.

• We distort actual events, in our favor. Like the students at Dartmouth and Princeton, we allow personal biases to color our recollections.

You can enhance your ability to learn from experience by doing a few simple things. First of all, keep track of your advice. Six or twelve months after the fact, ask yourself if you would give the same advice, or if, perhaps, you would say or do something different. Second, think about how past events might have turned out differently. Research has shown that you can reduce hindsight biases by looking at how the results of decisions could have been different. It's not enough to say, "Why did things turn out the way they did?" You also have to ask, "How else might it have turned out, and why?"


Based on our observations of professionals who have great judgment, here are some suggestions for improving your own decision-making ability:

Overinvest in problem identification. Lack of up-front investment in thorough understanding of the issues that the client faces is one of the biggest mistakes professionals make. At least 50 percent of the time, the "problem" presented by your client will change and evolve from the one you discussed at your initial meeting. It is a dangerous mistake to accept your client's first "problem statement" at face value.

Examine alternative problem definitions. Be creative in examining all the root causes of the issue at hand. Harvard's Joseph Bower, in our earlier example, correctly identified that his client's first problem was executive alignment and buy-in, not antiquated processes or information systems.

Make sure the problem is really apriority. Given the strategy, goals, and current situation of the organization or individual you're dealing with, does it make sense to work on this problem? A few years ago, a major bank had lost nearly $500 million in just twelve months. Management began soliciting multimillion-dollar bids to develop a "cultural change" program. Was this really the place to start, given the huge losses and other associated problems of cost efficiency and strategic positioning that the bank faced?

Ask "disconfirming" questions. As we mentioned earlier, you can avoid the confirmation judgment trap by asking questions and collecting data that you suspect might disprove the initial hypothesis. For example, the United States decided to drop the atom bomb on Japan in 1945 because of a firm belief that the Japanese would never surrender. U.S. officials believed that an invasion of mainland Japan, which would cost an estimated 1 million Allied casualties, was the only other viable option. But what if the following question had been seriously pursued: "Short of dropping the atom bomb or invading the mainland, what event could lead the Japanese to surrender?" This line of inquiry, if advanced in a thorough manner, might have revealed other options to the Allies, including the obvious one of just waiting for a few more weeks, since constant American firebombing had already destroyed a large number of Japanese cities.

Develop both standard and outlandish alternatives. We often put boundaries around our thinking, and this severely limits the range of alternatives or possibilities we are able to consider. What if we do nothing? What if we do the opposite of what everyone is suggesting? An outlandish alternative proposed at a Drexel Burnham brainstorming session in 1983 was the concept of an "air fund" for corporate acquisitions---a fund with no money in it. At first, the idea seemed absurd. But it eventually evolved and developed into the "highly confident" letter that Drexel would send out prior to a takeover. Basically, the letter stated that Drexel was highly confident the financing could be raised in the high-yield bond market.

There was no money available yet, just the promise of billions of dollars soon to materialize.

Engage in prospective hindsight. Try stating a question about the future in two different ways:

• How likely is it that our closest competitor will take ten points of market share away from us in the next two years and surpass us in revenue? Give reasons why this might occur.

Here is a slightly different version of this question:

• Pretend it is two years from now. Our closest competitor has increased its market share by ten points and surpassed us in revenue. Explain how and why this has happened.

When a hypothetical event is stated as a reality-as in the second question above-people are far more creative in coming up with reasons for why it could happen, and the quality of their thinking improves dramatically.

Understand your client's tolerance for risk and uncertainty. Every client has different levels of tolerance for risk, and this tolerance will vary from situation to situation. Several years ago, for example, a leading European travel company commissioned a group of consultants to review its U.S. operations. Although the firm's U.S. office was at a serious disadvantage against bigger players, and losing money, the consultants believed that with a great deal of work and further investment it could grow and achieve greater market clout and economies of scale, finally becoming profitable.

Their conclusions bothered the CEO, however, and he asked a friend, a former top executive in the travel business who had retired, to come see him. Sitting over lunch the next week, his friend said, "It all comes down to what management really wants here. So what do you really want out of your U.S. operations? And what risks will you tolerate?" The CEO paused, since no one had bothered to ask him these questions in quite this way. He replied, "I basically need to show the flag in the United States. The business doesn't have to be big-in fact it can be very small-we just need a visible presence. And I can't risk it ever losing any money. I just cannot afford it anymore-the government won't put up with the losses." The CEO declined the follow-on consulting contract and instead spent a month downsizing the U.S. office to the point where it could break even under any circumstances. The CEO was happy, and so were his shareholders, who were more interested in national representation-"showing the flag"-than market share. The consultants, in short, had misjudged their client's appetite for risk and misunderstood his business objectives in the United States.

Enhance your ability to reach for patterns in your experience. You can deepen your effective experience by learning from other, more seasoned peers. Get them to share stories and anecdotes. You might consider questions like: "What was the most difficult client you ever had? What was the most awkward professional moment of your career, and how did you handle it? Have you ever taken on a case that seemed hopeless? Why?" Stories are a powerful means of enhancing your experience.


Good judgment flourishes, first of all, in the absence of bad judgments. Great professionals help their clients avoid the many subtle judgment traps that can lead to poor decisions. Then they actively exploit each part of the judgment equation in a balanced fashion. They combine known facts with their experience and assess the alternatives through the lens of their beliefs and values, by becoming a deep generalist, cultivating your powers.

Do You Have Good Judgment?

• When your clients face tough choices, they often use you as a sounding board. They share their dilemmas with you.

• You're right more than 50 percent of the time.

• You have the confidence to make judgments relatively quickly. You identify and marshal the key facts and perspectives that you need, but it doesn't bother you if you don't have all the facts.

• If you're asked by a client to judge an issue where you lack experience and important information, you're not afraid to come out and say you just don't know.

• You're honest about your track record at giving advice and making recommendations. You've made mistakes and learned from them.

• You're very aware of your clients' tolerance for risk and loss, having discussed this openly with them.

Of synthesis, and developing good judgment, you will be well on the road to becoming a good thinker, a person aptly defined by Vincent Ruggiero in his book The Art of Thinking:

Good thinkers produce both more ideas and better ideas than poor thinkers. They become more adept in using a variety of invention techniques, enabling them to discover ideas. More specifically, good thinkers tend to see the problem from many perspectives before choosing any one, to consider many different investigative approaches, and to produce many ideas before turning to judgment. In addition, they are more willing to take intellectual risks, to be adventurous and consider outrageous or zany ideas, and to use their imaginations and aim for originality.

IF YOU ARE able not only to demonstrate sound judgment yourself but also help your clients arrive at their own good judgments, your value as an adviser will increase significantly. By developing a reputation among your clients as a good thinker, you will be asked back by them again and again.


Creating Trust through Integrity

QUESTION: Is not commercial credit based primarily upon money or property ?

j. PIERPONT MORGAN: No, sir, the first thing is character.

QUESTION: Before money or property ?

j. PIERPONT MORGAN: Before money or anything else. Money cannot buy it. . . . Because a man I do not trust could not get money from me on all the bonds in Christendom.

J. P. MORGAN'S 1912 Congression Testimony'

AMERICA is slowly becoming a low-trust society. In 1960, 58 percent of Americans surveyed felt that "most people could be trusted," but when asked the same question in 1993, only 37 percent replied in the affirmative. Evidence of low trust is everywhere: politicians routinely lie, litigation proliferates, and the confidence we have in a variety of professional figures-doctors, lawyers, consultants, stockbrokers, journalists, and others-appears to be at a low ebb. Even our trust in respected institutions such as local police, the FBI, clergy, and the military has waned in recent years.

A lack of trust in business and personal dealings carries many costs. Corporate managers and public officials, for example, are reluctant to share information that could empower their organizations, resulting in sharply reduced employee loyalty. Transaction costs, such as legal fees and overly detailed contracting, are major expenses for both corporations and individuals. And because of a fear that they will be sued, many employers refuse to give recommendations for former employees-the two parties, in essence, don't trust each other.

Service professionals, who have historically enjoyed a reputation for unimpeachable integrity, have contributed their fair share to the diminution of trust that clients place in them. Stories are reported in the press-and also occasionally circulated among clients-about investment banks whose client loyalties are a function of deal size rather than prior commitments; about consultants who oversell and put inexperienced staff on projects; of lawyers who create conflicts of interest by allowing themselves to become financially intertwined with their clients; and so on. Litigation against large professional service firms, once rare, has become commonplace.

The basic patterns are all fairly familiar by now: confidential information is misused; a client's interests are put last rather than first; standards are compromised in order to retain client business; and conflicts of interest are not disclosed. As the service industries become more competitive, there is an increasing tendency to compromise principles in order to meet growth and profitability objectives. Integrity, inexorably followed by a decline in trust, is the casualty.

Great professionals, however, never concede their integrity in order to win. They may be bold and determined in pursuit of their objectives, but integrity and their clients' needs-not selling the next assignment, not earning a large bonus, not pleasing their boss-come first. And if there ever is a conflict between the two-between what a client wants and what the professional's integrity dictates-integrity always wins out.


Trust is especially important in situations where there is a "high degree of dependence on someone else-precisely the situation when a client hires a professional for advice or buys a complex product or service from him. Trust between a client and a professional is both a necessity and an important asset for both parties: if there is mutual trust, everything works better, faster, and more smoothly. When a client trusts her professional adviser, a number of positive things happen:

• When you suggest additional work to your client, she believes you are proposing the work because you honestly believe it will help her, not because you need more business.

• Your client will be willing to buy services from you that extend beyond your core expertise. Trust allows you to increase the depth and breadth of the relationship.

• If you make an honest mistake or slip up in some way, your client will most likely forgive you and won't hold it against you.

• You will be able to work with your client on a more informal basis, leading to a more relaxed and creative process. There will be a decreased need to carefully document and check everything you do.

• When you make recommendations, they will have more impact. Your client will believe that your words are backed with integrity and that your only agenda is to help solve her problem.

Trust, in other words, is a professional's most powerful ally. Trust is worth a fortune (it is, literally, if we're talking about keeping a client for life), yet you can't purchase it, a fact noted b. P. Morgan when he testified before Congress in 1912. What is trust, exactly? We know it's missing in many aspects of our society, and we know how powerful it can be when it's present, but it's easier to articulate the feeling of trust than the elements that actually create it. Trust is complex: in some situations, it means "I believe you are competent to perform this service"; in others, "I know you will act in my interests, not yours." Author Robert Shaw proposes a general definition of trust: "A belief that those on whom we depend will meet our expectations of them."

Harry Hopkins: Franklin Roosevelt's Most Trusted Adviser

Harry Hopkins, who served as an adviser to Franklin Roosevelt from 1936 to 1945, was one of the most remarkable political advisers in U.S. history. Much of his success was based on a relationship of extraordinary trust that he developed not just with the U.S. president but with other world leaders at the time, such as Winston Churchill and Joseph Stalin. Hopkins, who had almost no formal position in the White House during World War II, was influential in both the success of the New Deal and the effective conduct of the war. The trust he engendered, added to his native abilities, enabled him to play a highly unusual role in both increasing Roosevelt's effectiveness as president and in facilitating a highly productive relationship among the Allied war leaders. Secretary of the Army George Marshall, who was not prone to hyperbole, said that Hopkins "rendered a service to this country which will never even vaguely be appreciated."

A professional social worker by training, Hopkins as a young man showed little hint of the greatness he would achieve as the most important adviser to a famous U.S. president. He headed the Federal Emergency Relief Administration and the Works Progress Administration during the mid-1930s and was secretary of commerce from 1938 to 1940. Ironically, it was when Hopkins abandoned any personal political aspirations that his power increased exponentially. He had a bout with cancer, then was diagnosed with a chronic, wasting intestinal ailment that doctors believed would be fatal. Because of his health, he gracefully stepped down as commerce secretary in 1940, but soon after Roosevelt was re-elected, he asked Hopkins to move into the White House and become his informal adviser. It was during the war years, when he held no major post, that Hopkins established a unique relationship with Roosevelt.

Living in a guestroom at the White House, Hopkins joined Roosevelt for virtually all his meals and attended every important meeting with him. Roosevelt got to know Hopkins intimately, reinforcing their personal chemistry and a sense that they shared many of the same values. Based on Roosevelt's deep trust in Hopkins, he sent him as his personal emissary to London in January 1941, to meet with Churchill (Roosevelt and Churchill did not yet know each other personally, although they had met once years earlier). Hopkins and Churchill spent two weeks together, including three weekends in the countryside at Chequers, the prime minister's country estate, where they talked, drank, and relaxed together. The relationship Hopkins established with Churchill during this trip built a foundation of trust that allowed Hopkins to create an unusual link between the two leaders.

Moreover, as Hopkins's biographer, Robert Sherwood, notes, "there was by now an intimacy between the two men which developed to such a degree that it is no exaggeration to say that Churchill reposed the same confidence in Hopkins that Roosevelt did." After yet a second visit with Churchill, Sherwood tells us, "there was started at this time correspondence without precedent: an informal, off-the-record but none the less official correspondence between the heads of two governments through a third party, Hopkins, in whose discretion and judgment each had complete confidence. Time and time again, when the Prime Minister wanted to sound out the President's views on some new move, he would address a private cable to Hopkins . . .

Hopkins exercised impeccable discretion. Despite being privy to virtually every state secret and private conversation of the president, he never, ever-not even once-betrayed the confidences placed in him. He never leaked news or used his information for personal gain. In July 1941, shortly after the Germans had invaded Russia, Roosevelt sent Hopkins to meet with Stalin in Moscow to assess the situation.

It was a historic set of meetings, the first between Stalin and a direct representative of the U.S. president. Very little was reported in the newspapers, however. During the press conferences he held afterward, Hopkins revealed virtually nothing about the substance of their talks, even though to do so would have enhanced his prestige and highlighted the powerful and unprecedented role he was playing. Roosevelt knew that Hopkins was as silent as a tomb, and it magnified his ability to trust him.

Hopkins's reliability and consistency further reinforced Roosevelt's belief in his integrity. He never overstepped his bounds; if Roosevelt sent him on a mission to meet with a foreign leader, he knew that Hopkins would assiduously adhere to the agenda and limits that had been set for him.

After every meeting, Hopkins would carefully draw up a detailed memo for the president that succinctly laid out the key points and issues to consider.

Hopkins didn't believe in political patronage, and he was incorruptible. When he administered relief funds for Roosevelt as head of the Federal Emergency Relief Administration, he did it strictly by the book, favoring no particular state or constituency. A few times, Roosevelt had to intervene to satisfy some political ally whom Hopkins had treated too impartially.

Hopkins never profited from his position of enormous influence; when he died in 1945, his estate was worth only a few hundred dollars. Yet this had been a man who had personally overseen the disbursement of $9 billion in aid during the Depression and who had been a director of the lend-lease program during World War II, which allocated over $50 billion in military spending.

In Roosevelt and Hopkins, Robert Sherwood sums up Hopkins the adviser: "Hopkins did not originate policy and then convince Roosevelt it was right. He had too much intelligence as well as respect for his Chief to attempt the role of mastermind. He made it his job to provide a sounding board for discussions of the best means of attaining the goals that the President set for himself. Roosevelt liked to think out loud, but his greatest difficulty was finding a listener who was both understanding and entirely trustworthy. That was Hopkins. Because he had set aside his own personal ambitions for formal office, Hopkins's agenda was Roosevelt's agenda. This, together with his unwavering integrity, made it easy for Roosevelt to trust him.

If we look at Harry Hopkins and his relationship with Roosevelt-indeed, if we examine any business relationship with a high degree of trust-several factors stand out that uniquely affect the level of trust that a client has in you.

The first major quality that underpins trust is integrity. The discretion, consistency, and reliability that you demonstrate, and your sense of right and wrong-these will influence, more than just about anything else, the degree of trust people place in you. Hopkins exhibited these qualities to Roosevelt on a daily basis, always coming through for the president, never forgetting a commitment, as incorruptible on the last day of his tenure as on the first.

Hopkins's strong performance at every task Roosevelt gave him illustrates an additional factor that builds trust: competence. In a business setting, a client's trust will naturally be influenced by whether or not he thinks you're competent to do the job you've promised. The risk of trusting someone is a final consideration, and that perceived risk will raise or lower the total amount of trust that a client has in you.

These three factors-integrity, competence, and risk- can be combined into a trust formula:

Trust = (Integrity X Competence)


Your clients' perception of each factor in the equation will raise or lower the trust they place in you.


Integrity is a state of wholeness in which you act in accordance with a set of coherent values or principles. In other

words, you know what's right, you're clear about what you believe in, and you consistently follow your beliefs.

Integrity has several main dimensions to it. The first, according to Yale law professor Stephen Carter, is discernment between right and wrong.7 Just acting consistently with your beliefs is not enough; you have to have beliefs that are ethical and moral. Adolph Hitler, for example, passed many of the tests of integrity-he acted on his beliefs quite consistently- but he had evil, wrong beliefs. There was no discernment.

In Dante's Inferno, which is the first part of his Divine Comedy, the "false counselors" are found in the eighth circle of hell, one of the lowest, just below common thieves.

These false counselors are spiritual thieves, who advised others to commit fraud. They used their intellect to rob people of their integrity, and as a result must walk for eternity enveloped in painful flames.

Using one's intellectual powers to deceive and encourage wrongdoing was, for Dante, an especially egregious crime. Honesty is an important manifestation of discernment.


Trust is like a fine Oriental rug that is carefully woven over many months or even years, rather than an edifice that is set up overnight. Lots of small things go into building trust. Here are some areas to consider:

1. Face Time with Clients

"One of my few client relationships that went badly," Spencer Stuart's Andrea de Cholnoky tells us, "was due to lack of face time. The client told me that he just hadn't seen enough of me, that it didn't seem like I had the energy in the assignment. I immediately called up every single one of my other clients and took them out to lunch! You've got to invest, continually, in face-to-face time with clients."

There is simply no substitute for meeting with a client and allowing time so that the two of you can come to know each other personally. The purpose is not to make the client like you-we're not talking about "schmoozing." And there's no guarantee that if you spend time together the trust will increase.

If, however, there is personal chemistry, as well as shared values and interests, personal time together will bring this out, and it will subtly facilitate the development of trust. Face time provides an opportunity for your client to see your sterling qualities firsthand. It amplifies your competence and integrity.

2. Setting and Reviewing Expectations

We said early on that a client's satisfaction is a function of expectations versus actual (or perceived) performance. Trust works the same way: you may very well fulfill your commitments on time, but if you and your client don't agree on what a particular commitment was in the first place, your perceived integrity will suffer and trust will diminish.

3. Carefully Making Promises

The worst kind of professional is someone who constantly promises things and never delivers. This kind of credibility gap, once established, is almost insuperable. Lewis Smedes, an ordained minister, beautifully sums up the meaning of a promise in a sermon entitled "The Power of Promises": "When a person makes a promise, he stretches himself out into circumstances that no one can control and controls at least one thing: he will be there no matter what the circumstances turn out to be."

Here are some suggestions for how to keep commitments:

• Don't be cavalier with promises. Don't say, "Let's have lunch" or "I'll call so-and-so for you" unless you really mean it. Being known as a person of your word is a powerful thing. Don't dilute your integrity with thoughtless commitments.

• If necessary, make conditional agreements. If an event or occurrence could get in the way of a promise, state it clearly up front. This way there will be no surprises.

• If you can't keep a promise, let the other person know as early as possible. The longer you wait to reveal the bad news, the worse things get. If you have built up trust by keeping your previous commitments, then that client will probably understand.

• Learn to say no. Busy, successful people are the ones who are always asked to do things. Be selective about what you commit to.

4. Demonstrating Loyalty

Loyalty means having an allegiance to your client and putting her agenda before your own. When clients experience a sense of loyalty from you, it reinforces their perception of your integrity and strengthens their ability to trust you. Someone who feels third or fourth on your list of priorities, who gets the impression that she's just one of dozens or hundreds of clients, is never going to trust you very deeply. Think about how you feel when a doctor barely recognizes you and has to visibly reorient himself as he walks into the examining room. Everyone wants to feel special-your clients are no different.

It's also important never to criticize anyone who is not present. You win the trust of the people you're with by showing loyalty to those who aren't there. If someone is indiscreet and tells you a piece of gossip or confidential information, it becomes difficult to trust that individual. If he or she is always criticizing other people, it makes you wonder, What will this person say about me to others?

5. Nurturing Trust on a Daily Basis

There is no doubt that one dramatic event can establish a great deal of trust. For example, when George Washington voluntarily relinquished the presidency after his second term had expired, he instilled a deep public trust both in himself and in the new American government. Few if any major heads of state before him had ever stepped down of their own free will. What really cements and develops a sense of trust, however, is the daily nurturing of your relationships. Stephen Covey's metaphor for this reservoir of trust is the emotional bank account. When an action reinforces trust, you have made a deposit; when you do something to undermine trust, such as letting someone down, you make a withdrawal. You have to make lots of deposits, regularly, to sustain trust.

6. There Are No "Minor" Commitments

At Beth Israel Hospital in Boston, legendary chief of surgery Dr. William Silen tells his residents, "I don't know what the difference is between 'major' and 'minor' surgery. I just know that no one performs 'minor' surgery on me!" In a similar vein, there is no such thing as a minor commitment. Each promise you make, large or small, should be treated with the same seriousness. "Character is made in the small moments of our lives," offered nineteenth-century clergyman Phillips Brooks. It's all the little things that you do-often when no one is looking- that constitute your character and define your integrity.

7. Knowing What You Stand For

By definition, integrity is a wholeness or completeness that is underpinned and bounded by a set of beliefs and values. What are your principles? What do you stand for? What guides your professional and personal life? Where do you draw the line when your beliefs are challenged or threatened?

Law professor and best-selling author Alan Dershowitz told us this story about clarity of principles and integrity: "Several years ago I helped a large law firm win a very important case. To celebrate, the partners took me out to dinner to a private club. I learned that the club did not allow women inside the door, however, a practice that violated one of my basic beliefs about equality between the sexes and non-discrimination. When I refused to go to the club, they said 'but there's no other good place to eat.' I insisted, and we ended up holding the victory dinner at McDonalds."

8. Being Prepared to Talk on TV

All professionals are faced with ethical and moral dilemmas just about every week of their lives. Some are relatively minor. Should I fly first class or economy? Should I put hotel laundry on my expense report? Some are major. Should I agree to an accounting practice that I feel is wrong? There are no simple rules for how to conduct yourself. Hemingway's quip that "I only know that moral is what you feel good after and immoral is what you feel bad after" can take you only so far.

One good principle to follow as a professional is what we call the "light-of-day" test. Whatever action you take, be it staying in a certain class of hotel or meeting with a client's competitor, would you be comfortable discussing it with your client the next morning in the full light of day? What if you were interviewed on television and asked about something you did? Would you feel comfortable explaining it?

"Anything related to issues of integrity, trust, and ethics are fatal flaws" commented Rebecca Guerra, the vice president for human resources at eBay, the online auction house. Speaking to The New York Times, she emphasized that while failure in one's past was OK, questions about character were unacceptable to her company.

Another way of looking at this is that you shouldn't have any secrets. By secrets we don't mean confidential client information, which you are duty-bound to protect. Rather, you should have nothing to hide; you should be comfortable sharing details of your professional conduct with a client, without embarrassment or defensiveness.

9. Reducing Your Client's Risk

Recall that the amount of trust a client has in you will go up or down depending on the risk he perceives. You can do several things to reduce this risk. First of all, you have to demonstrate consistency and reliability right from the start, even for the smallest of things. Showing integrity itself, in other words, reduces risk.

Second, you can either implicitly or explicitly guarantee your work. A guarantee doesn't have to take the form of a certificate that your clients mail in to you. More likely, it will be an understanding between you and your client. You want your clients to feel that if they are not satisfied at any time with your work, you will rectify it as best you can-period. The words "we'll work on this until you're satisfied" can be the occasional reminder of the fact that you'll stand behind your work and strive to address any issues they may have with your performance.


Sometimes, even though you feel you have demonstrated a high level of integrity and competence, trust is lost. Here are some principles to remember about losing trust:

Clients don't inform you when they stop trusting you. Trust can vanish rapidly and mysteriously, and you're always the last to know. Because the symptoms of a loss of trust can be so varied, and because some of them can also signify other problems or issues, it's always hard to pinpoint when your client stops trusting you. Perhaps you lose a follow-on assignment that you were sure you would win; or suddenly the client throws your business open for a competitive bid. Often, a client can't even articulate that she's lost trust in you. She feels a vague dissatisfaction, and she stops sharing information with you and turning to you for advice. You have to watch and listen very carefully.

It's useful to hold a frank and open discussion with your client when the engagement ends, something that is easier to do if you set the expectation, right up front, that you'll be having this discussion three or six months down the road. Unfortunately, by the time you discover that the trust has dried up, it may be too late to do anything about it.

Clients don't care why you let them down. Unless a catastrophe has occurred-an earthquake or a death in the family- clients, like most people, don't particularly care what the reason was that caused you not to deliver on a commitment. You may believe you had perfectly good reason to let them down, and the excuses are myriad: you caught a cold, the work took longer than you had planned, another client had an emergency, your computer crashed, you forgot to write it down in your agenda, you wrote it down in the wrong agenda, your secretary forgot to tell you about it, and so on. But your client doesn't really care, and trying to explain it won't help. It's better to say, "I let you down, I'm sorry, and it won't happen again." If you have built up a reservoir of trust with your client, he may let it pass.

Sometimes, repairing a lapse in trust can enhance your relationship. If you let a client down, you may be able to recover her confidence. How you react to the incident and the way in which you go about remediating it are critically important. Several years ago, a management consultant conducting an assignment for a large West Coast company carelessly left a draft copy of his report on a BART train in San Francisco. An unscrupulous passenger found it, contacted the client, and demanded $50,000 in ransom for the return of the document. All hell broke loose: the company threatened not just to terminate its relationship with the consultants, but to file a major lawsuit as well. The consulting firm went into action immediately. Its president flew out to California the next day and met with the CEO of the client company. He apologized for the incident, offering no excuses. He informed the CEO that the consultant had been disciplined and that the firm was assigning a task force of partners to develop new policies and procedures to minimize the possibility that such an incident could reoccur. Then he offered to conduct a major study for the client, free of charge, on a key issue the company faced. The client accepted, and the relationship continued successfully for another four years.

This anecdote illustrates some cardinal rules for dealing with a breach of trust:

• Admit that you've made a mistake. Own up to the lapse.

• Don't make excuses-no one wants to hear them.

Have You Developed Trust with Your Clients?

• Sometimes, you conduct assignments based on a minimum of documentation. Once you and your client have agreed on the objectives and deliverables, your client trusts you to follow through.

• Clients may remind you of something you're supposed to do, but they rarely "check up" on you.

• Clients ask you to tackle issues that are of major importance to them.

• If on a rare occasion you slip up and miss a commitment, your clients are very forgiving.

• There is a quality of openness to your client relationships. Both you and your clients feel free to bring up touchy or awkward subjects with each other.

• Your clients have become familiar with your particular skills as well as your values and beliefs. They can predict how you will react to a particular situation or dilemma.

• Clients' trust in you extends beyond their belief that you will do good work; it is a deeper, broader trust based on both professional competence and personal integrity.

• Provide value-added compensation to the client. Some clients might value having the fee reduced; for others, such as the client in the example above, a free piece of work can he appropriate.

• Learn from the incident, and let your client know that you are learning from it. Tell them what you're going to do to make sure it doesn't happen again.

There may be situations where you feel that you are 100 percent in the right and that the client is absolutely in the wrong. Even in these cases, keep in mind that the client perceives that you have let him down. You may have to walk away from the relationship, but be careful about how you deal with it; you don't want to leave burned bridges behind you. If there has been good communication between you and the client, however, and expectations have been set, you should be able to avoid this kind of confrontation.

DEEP PERSONAL and professional trust, which boils down to a client's belief in your integrity and your competence, is a hallmark of the long-term relationships that great professionals are able to develop. Clients expect and will forgive occasional errors of judgment, but lapses of integrity are a red flag to everyone around you. As the fifth-century religious leader St. Augustine wrote in his essay On Lying. "When regard for the truth has been broken down or even slightly weakened, all things will remain doubtful." Set high standards of conduct for yourself. Tirelessly develop your reputation for integrity and honesty, and it will become one of your biggest assets as a professional.


This is the true joy of life, the being used by a purpose recognized by yourself as a mighty one; the being thoroughly worn out before you are thrown on the scrap heap; the being a force of nature instead of a feverish, selfish little clod of ailments and grievances complaining that the world will not devote itself to making you happy.


GREAT PROFESSIONALS become extraordinary client advisers by developing some important attributes. These attributes encompass the important talents, skills, and attitudes that enable professionals in any field to build and sustain long-term, broad-gauge client relationships on a consistent basis.

The great advisers we've studied also possess certain outlooks that frame and inform their work. We call these outlooks the soul of the great professional. They are not so much personal characteristics as they are ways of looking at the world. If you cultivate them, your ability to add value will be enhanced, and you'll become a more appealing person to your clients-someone they will both respect and enjoy spending time with. In addition, you'll be better able to shape and manage your own career. These outlooks-the elements of this soul-can be discerned in virtually all of the professionals we have studied who command strong client loyalty.

Great Professionals Have an Abundance Mentality

An abundance mentality allows you to see the possibilities and opportunities inherent in every situation.1 The opposite is a scarcity mentality, which focuses on limitations and risks.

Professionals with an abundance mentality:

• Always look for opportunities, growth, and expansion

• Constantly generate new ideas

• Are positive and upbeat in their demeanor

• Feel that there are rewards enough to go around for everyone-they know that a "rising tide" lifts all boats

• Are willing to invest time and money in the short term in order to earn more later on.

Professionals with a scarcity mentality, in contrast, have very different attitudes. They:

• Are primarily concerned with what might go wrong and what won't work

• Focus on the risks of new proposals rather than the potential rewards

• Believe that life is a zero-sum game, with a limited amount of opportunity to go around

• Are concerned with "getting their fair share" at all times

• Won't make investments that don't show an immediate return

If you were a client, whom would you rather spend time with? There's no contest here: all of us would prefer a positive, energizing individual to someone who always sees the dark side of things. Some situations, such as a tax audit, may benefit from the scarcity mentality we've described. But in general, clients prefer and benefit from the expansive thinking of the professional who sees abundance, not scarcity.

Don't confuse an abundance mentality with laxness, laziness, or imprudence. The professionals who perceive abundance often have a healthy dissatisfaction with the way things are done today. They know there's often a better solution. Like strong organizational leaders, they push and stretch for new ideas and innovations; they don't wait for them to float down from the sky. That's why clients like having them around so much: these professionals constantly energize, motivate, and inspire others.

The sources of your fundamental outlook on life-abundance versus scarcity-are varied and complex. Your early childhood experiences and upbringing clearly have a strong influence on this dimension of your personality. Someone who suffers physical or emotional deprivation as a child, for example, may always harbor a deep-seated sense of scarcity. A lack of love and affection damages self-esteem, making it hard to have an abundance outlook. There is no doubt an element of personal "constitution" involved-some individuals just seem to be born with more resilience against the vicissitudes of life-but family and parental role models are also an important influence on your adult attitudes of either abundance or scarcity.

We believe that the education you receive plays a critical role as well. Economics and engineering, which are typical backgrounds of many professionals in business, are founded on principles of scarcity. Both disciplines are concerned with the optimal use of scarce resources. They focus on the tradeoffs that have to be made-for example, "guns versus butter," a graph recognizable to many readers, which is found in many introductory economics textbooks. The liberal arts, in contrast, are premised on abundance. The liberal arts perspective sees a world of nearly infinite ideas and resources, a world where trade-offs are not always necessary. It also raises important philosophical questions.

Rajat Gupta, McKinsey's worldwide managing director, says that he reads poetry at the end of each partners' meeting: "At first, that took people by surprise. But over time, poetry has affected what we're doing. Poetry helps us reflect on the important questions: What is the purpose of our business? What are our values?"

The European Renaissance, which was a time of enormous scientific as well as artistic ferment and innovation, exemplifies the power of the liberal arts perspective. The concept of humanism, which fueled the Renaissance, was based on a belief in the potential of human beings and their ability to reach self-fulfillment without recourse to higher powers or supernatural means. The most accomplished and inventive figures of the period, from Niccolo Machiavelli to Leonardo DaVinci, were consummate liberal arts scholars, equally at home with art, science, mathematics, philosophy, history, and literature.

Does this mean you have to study liberal arts to become an accomplished professional and develop lifelong clients? Yes and no. What we have found is that the best client advisers, regardless of what they majored in at college or studied in graduate school, become deep generalists. They read widely, take an interest in a variety of subjects and disciplines, and cultivate personal interests as well as professional expertise. Recall Peter Drucker, for example, who has a passion for Japanese art, or David Ogilvy, who had a deep interest in French culture (he eventually went to live in France). The risk of burrowing too deeply into one discipline like economics, engineering, or accounting is that you will begin to adopt a scarcity mentality. Broad knowledge and learning, in contrast, open the way for an outlook of abundance.

Great Professionals Have a Mission Orientation

The individuals who have had a significant impact on history-figures such as Jesus, Buddha, Joan of Arc, Gandhi, and Abraham Lincoln-had clear missions that led them to perform at extraordinary levels. The great advisers we've

looked at in this book also had well-developed personal missions. For Thomas More, it was fulfilling God's work in this life; for Niccolo Machiavelli, it was creating a stable, unified Italian state; for J. P. Morgan, it was establishing an orderly financial system in the absence of regulatory agencies. Gertrude Bell's mission was to promulgate an understanding of the Arab world among Westerners and ensure peaceful cohabitation of the Iraqis and the British. Early on, General George Marshall was driven by a desire to create a professional, respected U.S. Army founded on principles of excellence, efficiency, compassion, and hard work; later, his mission became no less than ensuring that the United States kept the world safe for democracy.

For most of us, our personal missions are perhaps more down-to-earth but no less sincere, sacred, and important to us. When you ask great professionals what drives them in their careers, you will hear phrases such as "making a difference to my clients' business"; "enriching management practice through my ideas"; "being a teacher-teaching and explaining the importance of people's rights"; "educating managers so they lead more successful, effective lives"; or simply "practicing excellence in everything I do."

Fred Brown, who descends from the famed Brown Brothers Harriman banking family, is an example of an extraordinary adviser who has a clear mission that drives his daily behavior. A highly successful personal financial consultant, Brown has authored several books on financial management. He writes a weekly newspaper column entitled "Money and Spirit," and he has a waiting list of clients. He could well afford a trophy house and late-model luxury cars, but his relatively modest home in the Southwest and his utilitarian Subaru suit him just fine-he prefers to live his values of moderation and balance rather than flaunt his achievements through flashy possessions. Using a powerful, unique approach to financial management that blends cutting-edge financial expertise with a deep understanding of each client's personal, familial, professional, and spiritual life, Brown has developed an intensely loyal following of individuals and families who come back to him year after year.

Brown charges an hourly rate that is a fraction of what the market could bear, but this is a conscious choice he has made that is consistent with his mission of helping people lead better lives through improved financial management. "By charging what I do," Brown tells us, "I am able to serve a very broad clientele-I get the millionaires but also people who are scraping by and desperately need help just to survive."

The opposite of a mission orientation is the strictly material orientation. Your main focus becomes money, title, promotion, or publicity. When a professional has no sense of mission, he or she risks becoming a mercenary-someone that Machiavelli cautioned against five hundred years ago when he wrote, "Mercenaries are disunited, thirsty for power, undisciplined, and disloyal." Machiavelli urged the creation of national militias-citizens' armies with an overriding purpose and an intense loyalty to their home state-a revolutionary concept at the time but now the accepted norm.

The author Victor Frankl, who survived the Nazi concentration camp at Auschwitz during World War II, wrote that "Nothing is more likely to help a person overcome or endure troubles than the consciousness of having a task in life." A mission orientation not only helps you overcome difficulties, but it will give you great strength in practicing the seven attributes. It will be easier for you to be an empathetic listener; your conviction will intensify; your integrity will be strengthened; and it will be far easier to practice selfless independence.

Great Professionals Channel Adversity into Wisdom and Confidence

The extraordinary client advisers we've profiled have all gone through difficult experiences. They've made mistakes, suffered reversals of fortune, and even been humiliated. Whereas many people become embittered, cynical, or distrustful as a result of these setbacks, the really great professionals get stronger. They become wiser, more confident, and humble. Their comfort zones expand, enabling them to tackle an ever-broader variety of situations and client assignments. Laura Herring's story illustrates how extraordinary setbacks can create resolve and determination. In less than ten years, Herring's firm, The IMPACT Group, has grown to 120 professionals who deliver a variety of relocation support services, from counseling to resume preparation. It had an inauspicious beginning, however. The concept got its start when Herring, originally a family therapist, pointed out to a Fortune 500 executive that relocation was one of the toughest personal issues facing his employees. Challenged to develop a solution, Herring invested $360,000 and months of time to create a program called Momentum. Just after the company placed a major order for her services, however, its relocation manager vetoed the idea, leaving Herring with no business. "I had double-mortgaged my house," she tells us, "and sold some real estate my husband and I owned. I was deeply in debt, with no cash flow. Panic set in." She goes on to say:

I was unable to go home and tell my husband what had happened. So I went to the phone book, and began looking through the Yellow Pages for other companies that I could sell the program to. I called the vice president of marketing at United Van Lines and told him I thought he should have the first shot at buying our services. He agreed to meet the next day. He loved the materials so much that he immediately placed an order for 10,000 tapes, books, and related services-it was a $1 million sale. I was ecstatic. Two days later, however, he called me back with terrible news. "We've decided to develop this internally," he told me. "We can't go forward with the order." Unfortunately, I didn't have a signed contract.

Shortly afterward, Herring flew to a relocation conference being held in Florida-her last hope-but after arriving, she learned she couldn't actively market to any of the participants. There, after three fruitless days walking the

floors of the conference hall, she finally met a top Johnson & Johnson executive who was literally walking out the door. Intrigued with her new (but still untested) service, he invited Herring to come to his office to make a presentation. "Gary Gorran," Herring concludes, "was the J&J executive. He became our first client, and thirteen years later he is still one of our best and largest clients."

When asked about how this and other difficult experiences affected her, Herring replies: "The other day I took my young niece to a club I belong to in St. Louis. When we walked in, a lot of people came over and greeted me. My niece was a bit shocked-she said to me, 'Everyone knows you-do you ever marvel at how far you've come? And I told her that I know what it's like to be invisible, and therefore I never take the end result for granted-you've got to earn it. There's always someone out there who is better and smarter than you are. There's always someone's uncle who knows more. You just have to keep driving toward your goals. I believe that failure is not a possibility."

Herring's account, and how it steeled rather than diminished her resolve and determination, is typical of great professionals. Consultant James Kelly tells another story of early-career trauma:

When I finished business school, Professor Dick Vancil hired me with the idea of building a faculty-based consulting firm [which under Kelly's leadership became the MAC Group, a $125 million strategy consul ting business]. The second year we did so well that we extended employment offers to a dozen top MBA graduates from around the country. But suddenly our backlog of business just died. It was early summer, and we were going to go bankrupt if we took on all these new hires. I had to call each one of them up, tell them what had happened, and rescind the offers. It was one of the worst days of my professional life.

Although it may seem that Kelly (who was twenty-six at the time) exercised poor judgment in hiring so many new people, he learned from the episode. He could have become gun-shy, retrenched, and never made a bold hiring move again. Instead, he assimilated the experience in a balanced, constructive way. His subsequent careful management of revenues, backlog, and professional staffing at the MAC Group resulted in twenty-five years of continual growth and profitability under his leadership-a far better record than most consulting firms can show.

Great Professionals Always View Old Clients As New Clients

A marriage requires constant work and investment--just ask any Couple that has successfully been together for fifteen or twenty years. When a couple divorces, the partners will often look back and describe a long period of mutual neglect prior to the eruption of real acrimony. If one spouse is working in a demanding occupation, for example, it may seem as if his or her job gets all the time and attention, leaving little energy for the other person.

The bases for successful marriages and successful long-term client relationships are similar. When you've been working with a client for many years, the tendency is to take each other for granted. If you're like the vast majority of professionals, most of your marketing and promotional resources go to new, prospective clients rather than to your existing clients. As benign neglect sets in, your long-term client may become intrigued by other professionals in your field competitors whose ideas seem newer and fresher, who are courting him aggressively. Just as in a marriage, the antidote to wandering clients is constant reinvestment that revitalizes the relationship.

When we look at professionals who have long-term, broad-based client relationships, who inspire great client loyalty, they all have a similar approach: they treat each assignment as if it were the first one for that client. They bring the same energy, creativity, and drive to their long-term clients as they do to the new client they are trying to impress. They communicate constantly, and the flow of ideas never stops. Even if they aren't working on an assignment for the client at that moment, they are in touch at least two or three times a year. The courtship, so to speak, never stops.

Great Professionals Engage in Continual Self-renewal

Most professionals focus on their income statement- their annual tally of expenses and revenues, leading to a figure that represents their total income for that year. This is true whether you work for a large firm or on your own. If you invested a lot in a client proposal that fell through, your year-end bonus may be reduced. If you sold a large piece of follow-on business, your bonus may be larger than usual. The focus is this year's sacrifices and rewards.

If you earnestly develop the attributes and outlooks we've been discussing, however, you will naturally build your balance sheet assets. Deep generalists, for example, make investments in learning and acquiring knowledge that may have no immediate payback but bring rewards two or three years down the road.

Your personal capital-the sum of your talents, skills, experiences, and knowledge-can be developed in many ways. This personal development can but doesn't have to occur through dramatic actions, such as taking a formal sabbatical or making a career change. Often, professionals embed it in their daily routines, indulging in leisurely reading, self-study, and the gradual cultivation of new areas of interest.

Harvard Law School professor Alan Dershowitz, for example, after writing a series of very successful nonfiction books, recently published his first novel. Renowned management consultant Ram Charan just followed up several years of work on how effective corporate boards function with a book on growth strategies. Although part of the pre-Internet generation, financial consultant Fred Brown is going up learning curve and setting up an interactive Web site, which may not yield significant results for a year or two, to extend the reach of a steep his innovative financial counseling.

How do you know when it's time to push into new areas? Peter Drucker counsels that it's time for a change "When the harder you work, the less you seem to accomplish-or when you're sure that you know all the answers, and you've stopped asking, 'What are the right questions?' "5

Just as successful professionals take a long-term view of client relationships, they also have a multiyear perspective on their own personal and professional development. They follow Thomas More's injunction to "live as if you are to die tomorrow, study as if you were to live forever." When you focus on building your balance sheet-on self-renewal- remember that your income statement may take some hits. This is why it's so important to cultivate qualities such as independence and conviction. Without them it will be difficult to navigate the inevitable squalls that are part of asset building.

Great professionals successfully develop and integrate the seven core attributes into a powerful whole, and then in-

The Ingredients for Breakthrough Relationships

Knowledge Depth and Breadth

Selfless .

Independence Abundance Empathy " '

The Soul of the Great Professional,

fuse everything they do with their soul of abundance, mission, and self-renewal. This combination of attributes and outlooks, summarized in the accompanying illustration, enables professionals to create broad-based, abiding client relationships that engender collaboration and insight.


1. What happens when client loyalties shift unpredictably?

2. What do professionals focus on ?

3. Can you anticipate client needs?

4. What makes you a deep generalist?

5. How important is keen judgment?

6. Is overconfidence a judgment trap?

7. Can we use intuition to leverage facts and personal experience?

8. Do you have a good judgment?

9. What do the lack of trust in business and personal dealings entail?

10. How can you build trust in a low trusted world?

11. Can overconfidence be considered the most common judgment trap?

12. Can you be misled by experience?

13. How can you improve your own decision making ability?


1. A professional adviser should be independently wealthy; then he would be objective, independent.

2. The great client advisers are constant learners not wedded to past concepts, they help accelerate learning within the organizations they serve.

3. One cool judgment is worth a thousand hasty councils. The thing to do is to supply light and not heat.

4. Clients don't care why you let them down, they don't inform you when they stop trusting you.

5. Princes like to be helped, but not surpassed. When you counsel someone, you should appear to be reminding him of something he had forgotten, not the light he was unable to see.

Tips on Managing Relationship Value

If you want to keep a relationship on an even keel, manage it as you would any other activity that matters to you.

• Create trust. Trust is created when people see tangible evidence that one's words and actions are in harmony. So avoid making commitments you may be unable to honor, and always do what you have committed to do. Trust is also created when you acknowledge and demonstrate respect for the other party's core interests.

• Communicate. The different parties should communicate their interests, their capabilities, and their concerns to each other. For example, if you agreed to complete a customer survey for the marketing vice president within thirty days but have hit a logjam, communicate that information to him.

• Never sweep mistakes under the rug. Mistakes are bound to happen. Acknowledging and addressing them-quickly-is always the best course of action.

• Ask for feedback. If everything appears to be going as planned, never assume that the other side sees it the same way. Be proactive in uncovering problems. The other side will respect you for it. Ask questions such as these: "Is everything happening as you expected?" "Are the parts reaching your plant on schedule?" "Did my report cover all important points?"


Negotiation is a means by which people deal with their differences. Whether such differences involve the purchase of a new car, a labor contract dispute, the terms of a sale, a complex alliance between two companies or a peace accord, resolutions are sought through negotiations. To negotiate is to seek mutual agreement through dialogue.

Negotiation became an ever present feature of our lives both at home and at work.

A business negotiation may be a formal affair that takes place across the bargaining table where you haggle over price and performance or the complex terms of a partnership venture. It may be less formal such as a meeting between you and several employees whose collaboration is needed to get a job done. Whether a supervisor, manager or executive you will probably spend a good part of your day negotiating with people inside or outside your organization. If you are closing a sale or getting a subordinate to agree to certain performance goals you are negotiating too.


The basic types of negotiation you're likely to encounter are the following:

• A distributive negotiation which pits two or more parties in competition for a fixed amount of value. Here, each side's goal is to claim as much value as possible, as in the sale of a rug at a street bazaar. Value gained by one party is unavailable to others.

• Integrative negotiation is about creating and claiming value. Through collaboration and information sharing, the parties look for opportunities to satisfy the key objectives of each, recognizing that they will probably have to give ground on other objectives.

• The negotiator's dilemma describes the situation faced by people who enter any type of bargaining situation. They must determine which game to play: aggressively claim the value currently on the table (and possibly come out the loser), or work with the other side to create even better opportunities that can be shared.

• No matter which type of negotiation you're faced with, it's bound to be more complex if it is multi phased or involves multiple parties. If your negotiation is multi phased, use the early phases to build trust and to become familiar with the other parties. If many parties are involved, consider the benefits of forming a coalition to improve your bargaining power.

When people don't have the power to force a desired outcome, they negotiate- but only when they believe it is to their advantage to do so. A negotiated solution is advantageous only under certain condition, that is when a better option is not available. Any successful negotiation must have a fundamental framework based on knowing the following: the alternative to negotiation, the minimum threshold for a negotiated deal, how flexible a party is willing to be and what trade offs it is willing to make. We consider three concepts important for establishing this framework: BATNA (best alternative to a negotiated agreement), reservation price and ZOPA (zone of possible agreement).

*BATNA is the best alternative to a negotiated agreement. It is one's preferred course of action in the absence of a deal. Knowing your BATNA means knowing what you will do or what will happen it you fail to reach agreement. Don't enter a negotiation without knowing your BATN A.

• It your BATNA is weak, do what you can to improve it. Anything that strengthens your BATNA improves your negotiating position.

• Identity the other side's BATNA. (Fit is strong, think of what you can do to weaken it.

* Reservation price is the price at which the rational negotiator will walk away. Don't enter a negotiation without a clear reservation price.

* Z0PA is the zone of possible agreement. It is the area in which a deal will satisfy all parties. This area exists when the parties have different reservation prices, as when a home buyer is willing to pay up to $275,000 and the home seller is willing to take an offer that is at least $250,000.

* Value creation through trades is possible when a party has something he or she values less than does the other party- and vice versa. By trading these values, the parties lose little but gain greatly.


If your aim is to be an effective negotiator, take the time and make the effort needed to become fully prepared. There are nine preparatory steps:

1. Know what a good outcome would be from your point of view and that of the other side. Never enter into a negotiation without first asking yourself: what would be a good outcome for me? Then ask the same question from the perspective of the other side.

2. Look for opportunities to create value in the deal. You can identify areas of common ground, compromise, opportunities for favorable trades.

3. Know your BATNA and reservation price. Make an effort to estimate those benchmarks for the other side.

4. If your BATNA isn't strong, find ways to improve it. Good negotiators work to improve their BATNA before and during deliberations with the other side.

5. Find out if the person or team you're dealing with has the authority to make a deal. You find real advantages to negotiate with the person who has the power to sign on the dotted line: all of your reasoning is heard directly by the decision maker, the benefits of the good relationship build at the bargaining table are likely to be reflected in the deal and its implementation, there are fewer chances of disputes or misinterpretation of particular provisions..

6. Know those with whom you're dealing. Learn as much as you can about the people and the culture on the other side and how they've framed the issue.

7. If a future relationship with the other side matters, gather the external standards and criteria that will show your offer to be fair and reasonable.

8. Don't expect things to follow a linear path to a conclusion. Be prepared for bumps in the road and periodic delays.

9. Alter the agenda and process moves in your favor. Learning about the issues and about the other side is always limited by time, the cost of gathering information and the fact that some information will be deliberately hidden. We have to be prepared to learn as negotiations unfold.


The first challenge in negotiation is to get the other side to the table.

This won't happen unless the other side sees that it is better off negotiating than going with the status quo. Encourage negotiation by uttering incentives, making the status quo expensive, and by enlisting the help of allies.

Once you've gotten the other side to the table, get things off to a good start by relieving tension, making sure that all parties agree with the agenda and the process, and setting the right tone.

Several tactics are particularly useful in distributed (or win-lose) deals:

* Establish an anchor, an initial position around which negotiations make adjustments.

" It an initial anchor is unacceptable to you, steer the conversation away from numbers and proposals. Focus instead on interests, concerns, and generalities. Then, after some time has passed and more information has surfaced, put your number or proposal on the table, and support it with sound reasoning.

* Make concessionary moves if you must. But remember, many interpret a large concessionary move as an indicator that you're capable of conceding still more. A small concession, on the other hand, is generally seen as an indication that the bidding is approaching the reservation price and that any succeeding concessions will be smaller and smaller.

Tactics for distributive (win-win) negotiations are fundamentally different from those just described since value creation is one of the goals. So concentrate on these tactics:

• Active listening: keep your eyes on the speaker, take notes as appropriate, don't allow yourself to think about anything but what the speaker is saying, resist the urge to formulate your response until after the speaker has finished, pay attention to the speaker's body language, ask questions to get more information and to encourage the speaker to continue, repeat in your own words what you've heard to ensure that you understand and to let the speaker know that you've processed his or her words.

• Exploiting complementary interests

• Packaging options for more favorable deals

Some of the questions in negotiation are organized under three categories: price, procedures, and people.

1. Should I ever state my acceptable range? (Some negotiators will ask you to state a monetary range of what you are willing to pay).

Should I tell the other side my real bottom line?(you can reveal your bottom line only if you've reached it)

2. Is it ever acceptable to bid against myself- to make two moves in a row? (Just say: wait, you seem to be asking me to make another move here. I made the last offer; I don't want to bid against myself; give me your offer).

3. Is it smart or fair to bluff?( as long as what you bring to the table has real value, you need not reveal all the circumstances that make you willing to conclude a deal. You may describe the major projects for which you have been responsible if negotiating the terms of a job offer)

4. Is it better to reach agreement issues by issue or wait until the end? (It's better to aim for tentative agreements or agreed upon ranges for each issue, one at a time).

5. Is it better to deal with difficult or easy issues first? (Dealing with easier issues will build momentum, deepen the parties' commitments to the process, enable the parties to become familiar with each other's negotiation and communication styles before hitting the tough stuff).

6. What if there is an unexpected turn in the road before or after an agreement? (You have to determine if a deal still makes sense or if you need to undo the deal that has been negotiated)

7. What happens when you pit a collaborative negotiator against a positional hard bargainer? (if the collaborative negotiator is effective, he should be able to tease out some of the interests underlying the hard bargainer's positions)

8. How should I respond if the other side seeks to change something in its offer after a deal has been reached? (express surprise or disappointment)

9. What should I do when the negotiator on the other side has a temper tantrum?(help him regain control, the right response will depend upon how angry or upset you feel, the value of the deal).

10. I don't believe what the other side is saying. What should I do?(you require that they provide back up documentation and that the deal be explicitly contingent on its accuracy)

11. When is it appropriate to negotiate, over the telephone or by e-mail? Or is it essential to insist on a face to face meeting? ( e-mail communication is devoid of emotions; for an inexperienced negotiator this can be a big plus)

12. How should I react when the other side challenges my credentials, status, authority to make a deal?(the best approach is to shift the discussion to general ground rules).


Typical barriers to negotiated agreements and what you can do to overcome or eliminate them

• Die-hard bargainers will pull for every advantage and try to make every concession come from you. You can deal with these people if you understand the game they are playing, withhold useful information from them (they'll only use it against you) unless they demonstrate a willingness to reciprocate, and make it clear that you don't mind walking away. If you don't want to walk away-or cannot-do whatever you can to strengthen your position and your alternative to a deal.

• Lack of trust is a serious impediment to making a deal. Nevertheless, agreements are possible if you take precautions, require enforcement mechanisms, build incentives for compliance into the deal, and insist on compliance transparency.

• It's difficult to make a deal-and impossible to create value-in the absence of information. What are the other side's interests?

What does it have to offer? What is it willing to trade? Ironically, fear of advantaging the other side encourages parties to withhold the information needed to create value for both sides. Each is reluctant to be the first to open up. This is the negotiator's dilemma. The solution to this dilemma is cautious, mutual, and incremental information sharing.

Structural impediments include the absence of important parties at the table, the presence of others who don't belong there but get in the way, and lack of pressure to move toward an agreement. Remedies to these impediments were provided.

Spoilers are people who block or undermine negotiations. Several tips were offered for neutralizing or winning over these individuals, including the creation of winning coalitions.

Cultural and gender difference can be barriers to agreement, particularly when one of the parties brings to the table a set of assumptions that the other side fails to notice: assumptions about who will make key decisions, what is of value, and what will happen if agreement is reached. Negotiators who represent organizations with conflicting cultures (e.g., entrepreneurial versus bureaucratic) are also likely to experience problems in reaching agreements.

Communication problems can also create barriers .You can diffuse them by insisting that each team be led by an effective communicator and by practicing active listening, documenting progress as it is made, and establishing real dialogue between parties.

Dialogue can eliminate or lower all of the barriers.

Mental errors by negotiators can result in no deal or a bad deal.

• Escalation-that is, irrational escalation-is the continuation of a previously selected course of action beyond the point where it continues to makes sense. Some people commit this error because they cannot stand losing. Others fall prey to auction fever.

• Partisan perception is the psychological phenomenon that causes people to perceive truth with a built-in bias in their own favor or toward their own point of view.

• Irrational expectations are an error insofar as they eliminate zones of possible agreement.

1. Overconfidence in negotiating is dangerous. It encourages negotiators to overestimate their strengths and underestimate their rivals. It is reinforced by groupthink, a mode of thinking driven by consensus that tends to override the motivation to realistically appraise alternative courses of action. The antidote to both overconfidence and groupthink is to have one or more objective outsiders examine one's assumptions.

Unchecked emotions are frequently observed in business negotiations, and generally result in self-injury. Among the remedies recommended are a cooling-off period and the use of an objective moderator. In the absence of a moderator we have to do the following:

-determine what is making the other negotiator angry. What does this deal or this dispute mean to him? listen very carefully when he gets angry.

-respond to what appears to be the emotional problem.

-remember that people are most often angered and frustrated at a personal level by perceived deception, unfairness, humiliation or loss of pride and lack of respect. You can avoid these land mines by focusing discussion on the issues and the problems instead of on individuals and their personalities.

The relationship value that is part of so many of today's agreements, both between separate entities and between employees of the same organization.

• Flatter organizations and the desire of companies to build long-term links with suppliers are two important reasons why relationships matter in many of today's negotiations.

• Relationship value moderates extreme value-claiming behavior. Negotiating parties understand that trying too hard to claim value today will risk losing opportunities for claiming value in future transactions.

• Parties who perceive no relationship value will aggressively claim value.

• Even when both parties recognize a relationship value, there is likely to be an imbalance in how strongly each party feels about that value. This can lead to manipulation of the party to whom the relationship matters most.

• Negotiators must separate the deal from the broader relationship.


People and organizations represent their own interests but in many other cases, they are represented by others. These others may be independent agents contracted to represent one of the parties. They may be non independent agents- employees- charged with representing their companies; or they may be officials of an organization whose responsibility is to represent the interests of their members.

• An agent is a person charged with representing the interests of another (a principal) in negotiations with a third party.

• People engage agents to represent them in negotiations when the agent has greater expertise and when they want to reduce the risk of damaging their relationship with the other side.

Information asymmetries, divided interests, and conflicts of interest are three important problems in the agent/principal relationship.

Information asymmetry means that one party has more information than the other. If the principal has much more information than the agent, the agent may have a difficult time representing the principal's interests; in the reverse situation, the agent may discover value-creating opportunities that the principal does not understand or appreciate.

Not every organization is of one mind as to its core interests. This fact puts those who represent the organization into a difficult position.

Principals face the problem of preventing agents from putting agent interests ahead of their own. Incentive systems that align the agent's interests with those of the principal can help, especially when combined with oversight and communication.


It's one thing to develop one's individual negotiating skills. Developing the negotiating skills of an organization at many levels is a very different challenge, but one with great potential rewards.

• The discipline of continuous improvement can develop the effectiveness of an organization's internal capabilities and, over time, improve bottom-line results. This same discipline can be applied to the negotiation process.

• The first step toward continuous improvement in negotiations is to treat negotiation as a process with a fairly universal set of process steps: pre-negotiations, preparation, negotiations, agreement or non agreement, postmortem learning, and learning capture. Learning capture feeds back to the next negotiating experience. The second step is to organize to learn from the process as it takes place, and at the conclusion of the negotiation itself.

• An organization can improve its overall negotiating skill and turn that skill into an important capability by doing the following: providing training and preparation for negotiators, clarifying organizational goals and expectations from any agreement and clarifying when negotiators should walk away, insisting that every negotiating team develop a BATNA and work to improve it, developing mechanisms for capturing and reusing lessons learned from previous negotiations, and developing negotiating performance measures and linking them to rewards.

Because organizational competence is the sum of the competences of an organization's individual members, we have to know the characteristics of effective negotiators. These define the goals that management should aim for in developing organization-wide capabilities. An effective negotiator

• Aligns negotiating goals with organizational goals

• Prepares thoroughly and uses each negotiating phase to prepare further

• Uses negotiating sessions to learn more about the issues at stake and the other side's BATNA and reservation price

• Has the mental dexterity to identify the interests of both sides, and the creativity to think of value-creating options that produce win-win situations

• Can separate personal issues from negotiating issues

• Can recognize potential barriers to agreement

• Knows how to form coalitions

• Develops a reputation for reliability and trustworthiness
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Difficulties in Communication

Communication is the medium of negotiation. You cannot make progress without it. Poor communication renders the simple treacherous and the difficult impossible. Communication problems cause deals to go sour and disputes to ripen. When you suspect that communication is causing the negotiation to go oft track, try the following tactics:

• Ask for a break. Replay in your mind what has been communicated, how, and by whom. Look for a pattern. Does the confusion or misunderstanding arise from a single issue? Were important assumptions or expectations not articulated? After the break, raise the ...

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