BUSINESS ENGLISH II. II.

Kolokvij

TRADE
Trade is an exchange of goods and services; you have to give something up to
get something
Trade is used:

To get something better / more valuable

To get something you cannot make yourself
To benefit from the trade

Trade id divided into domestic and international trade

Pros/ Cons:

The advantage is that it creates wealth on the global scale.

On the other hand, it might not create wealth for some countries because
they have nothing that other countries want

WholesalerPerson or firm that buys large quantity of goods from various

producers or vendors, warehouses them, and resells to retailers (trgovac na
veliko)
Retail outletA store that sells smaller quantities of products or services to the
general public (end consumers), it typically buys goods directly from
manufacturers or wholesale suppliers (prodajno mjesto)
Discount storesoffers its items at a lower price than many other retail stores
(outleti, npr. roses)
Department stores large retail establishment with an extensive assortment in
variety and range of goods, organized into separate departments (robna kua)
Vending machines automati( aparati)

STORM CLOUDS OVER THE MALL, pg. 39

WHAT SHOULD RETAILERS DO:

Specialize in a narrower range of products aimed at a specific group of

consumers.
Merge with other retailers.
Concentrate on specific regions and abandon markets where the
company is weak.
Win the trust and confidence of consumers, either through pricing or
service.

Change the supply chain: instead of long supply lines introduce fewer
lines more locally.
Open virtual stores to supplement in-store sales

E-COMMERCE, pg. 43

even though retailers are aware of the importance of the internet, few
have changed their attitudes to online sales
share of online sales in total sales is on the rise
online sales should be integrated seamlessly with brick-and-mortar sales
retailers need to distinguish between online and offline goods
brick-and-mortar stores can survive if designed well
winners and losers of changes in retail business

Ladies who lunch well-off, well-dresses non-working women who meet each
other for lunch during the working weekend
Bargain-hunter someone who tries to find goods at discounted prices
Big-box retailer a retailer set up in a big box-like bulding with a large amount of
floor space, seling wide range of products at low prices

INTERNATIONAL TRADE
Visible trade trade in goods (trgovina dobrima)
Invisible imports/exports trade in services (trgovina uslugama)
Barter direct exchange of goods, without the use of money (trampa, roba za
robu)
Balance of trade the diffrence between what a country receives and pays for its
exports and its total expenditure on imports (trgovinska bilanca)
Balance of pay the diffrence between a country's total earnings from exports
and its total expenditure on imports (platna bilanca)
Autarky the (impossible) situation in which a country is completely selfsufficient and has no foreign trade (autarhija, zatvoreno gospodarstvo)
Surplus a positive balance of trade and payments (suficit)
Deficit a negative balance of trade and payments (deficit)
Dumping selling goods abroad at (or below) cost price
Protectionism imposing trade barriers in order to restrict imports
(protekcionizam)
Tariffs taxes charged on imports (carine)

Quotas quantitative limits on the import of particular products or commodities

(kvote)
COMPARATIVE COST PRINCIPLEA situation in which a country, individual,
company or region can produce a good at a lower opportunity cost than a
competitor; countries should specialize in the goods they can produce most
efficiently

FREE TRADE/PROTECTIONISM (vjeba sa prezentacije)

Free trade is international trading without government interference. It is trade
without trade barriers.
Protectionism is a set of policies which protect home (domestic, strategic, infant)
industries against foreign competition.
Protectionism uses trade barriers (restrictions on the imports of foreign goods).
These barriers include tariffs, subsidies, quotas, non-tariff barriers, embargo etc.

WTO (world trade organisation) international organization which deals with

the rules of trade between nations to help producers, exporters and importers
conduct their business(svjetska trgovinska organizacija)
IMF(international monetary fund) organization which tries to foster global
monetary cooperation, secure financial stability, facilitate international trade,
promote high employment and sustainable economic growth, and reduce poverty
around the world (meunarodni monetarni fond)

PROTECTIONISM AND FREE TRADE, pg. 45 (saetak teksta)

The comparative cost principle proposes that countries will raise the living
standard if they specialize in the production of the goods and services in
which they are efficient.
Politicians protect strategic industries because if we abandon all sectors in
which we dont have a comparative advantage, this might lead to
structural unemployment
Governments impose tariffs to destroy or weaken competitors, and
retaliate against restrictions imposed by other countries.
Infant industries are protected until they achieve economies of scale.
Tariffs provide revenue for the government, unlike quotas.
Developing countries wanted to counteract a fall in commodity prices so
they started to practise import substitution
Developing countries have debts because they cant pay the interest, let
alone repay the principal, so they have to rollover (renew) a loan, or
reschedule (postpone) repayments.

Still, for fear of being excluded from international trade, third world
countries have to liberalize their economies and lower trade barriers and
be open to international trade

Impose tariffs and quotas nametnuti carine i kvote

Retaliate fight back
Counteract protiviti se
Rollover the loans zajam za otplatu zajma
Subsidies subvencije (vlada drugima)
Liberalize putanje strane robe
CAP common agric. policy
Sustainable development odrivi razvoj

REASONS FOR FREE TRADE:

promotes peace and stability

guarantees producers (exporters) bigger markets
guarantees consumers the lowest prices
breaks down barriers bretween nations
fosters economic growth

REASONS AGAINST FREE TRADE:

prohibits developing countries from protecting their infant industries

pollutes the environment bcs of increased transport of goods
allows rich countries to dump subsidized, industrially produced food in poor
countries
favours commercial values (not labour and environmental issues)

OH, SWEET REASON, pg. 49

WTO policies allow rich countries to dump heavily subsidized industrially
produced food in poor countries, which damages local production ex. Sugar
subsidies

THE EUROPEAN UNION

The European Economic Community (EEC) was created in 1957 between

six countries: Belgium, Germany, France, Italy, Luxembourg and the
Netherlands by signing the Treaty of Rome
A unique economic and political partnership between 28 democratic
European countries
It was established to foster economic cooperation (and reduce the
likelihood of conflict)
EU flag has 12 stars
Motto: ''United in diversity''
Anthem: Beethovens Ninth Symphony: Ode to Joy
State founders : Germany, Italy, France and Benelux countries
There are 24 official languages
Europe day: 9 May
Demography: Europeans live longer, have fewer children
Globalisation: European economy faces competition from other parts of the
world
Climate change: Emission of greenhouse gases must come down
Croatia entered EU in 2013

Body of EU:

the European Parliament (representing the people of Europe);

the Council of the European Union (representing national governments);
the European Commission (representing the common EU interest).

Single market is a type of trade bloc in which most trade barriers have been
removed (for goods), the physical (borders), technical (standards) and fiscal
(taxes) barriers among the member states are removed to the maximum extent
possible (jedinstveno trite)
Common market - is built upon a free trade area with relatively free movement of
capital and of services, but not so advanced in reduction of the rest of the trade
barriers (zajedniko trite)
Accession pristupanje
Pre-accession funds pretpristupni fondovi

Member states drave lanice

Euroscepticism - criticism of, or opposition to, the European Union
(euroskepticizam)
Harmonization usklaivanje
Enlargment proirenje
Single currency jedinstvena valuta
Euro zone eurozona
Accede (to) pristupiti
Treaty of Rome Rimski ugovor
Candidate country drava kandidat
Apply for membership prijaviti se za lanstvo
Acquis communautaire pravna steevina zajednice
Treaties - ugovori
Primjer zadatka: harmonization, candidate, treaties, accedes, opening, EU,
overview, Accession, Member states
Accession Negotiations are the processes by which a candidate country accedes
to the EU and adopts its founding treaties. The close of Accession Negotiations is
followed by the signing of an international treaty between the EU Member States
and the candidate country called the Accession Treaty. The formal opening of the
negotiating process is followed by the analytical overview and evaluation of the
degree of harmonization of national legislation with the acquis communautaire,
known as screening.

REASONS FOR EU:

Single currency, no suffer from flactuactions

No barriers, free trade
ERASMUS
Access to EU funds
Passport free

REASONS AGAINST EU:

Can't save autochthonous products

Control from Bruxelles

BANKING
VOCABULARY:
RETAIL BANKS OR COMMERCIAL BANKS-receive deposits and make loans to..
( poslovne banke, uzimaju depozite i pruaju kredite pojedincima i malim
kompanijama)
INVESTMENT BANKS give financial advice, raise capital for companies, issue
shares and bonds, arrange mergers and takeover bids, offer stockbroking and
portfolio management services (investicijske banke, rade sa velikim
kompanijama, poveavaju kapital izdavanjem dionica, organiziranjem spajanja...)
PRIVATE BANKS privatne banke (za bogate pojedince, pruaju bankarske i
investicijske usluge)
NON-BANK FINANCIAL INTERMEDIARIES
prodajna mjesta koja pruaju neke od bankarskih usluga, ali nisu banke
HEDGE FUNDS posebna vrsta investicijskih fondova za bogate investitore,
riskatne investicije zbog vee oekivane dobiti
CURRENT ACCOUNT raun u banci
CASH DISPENSER (ATM) bankomat
DEBIT CARD/ATM CARD debitna kartica
CREDIT CARD kreditna kartica
SAVINGS ACCOUNT tedni raun
CHEQUEBOOK ekovna knjiica
STANDING ORDER trajni nalog
LOANS a sum of money borrowed from the bank (krediti)
OVERDRAFT - nalog za isplatu koji nema dovoljno pokrie
MORTGAGE hipoteka
EXCHANGE OF FOREIGN CURRENCY razmjena strane valute
INTERNET BANKING internet bankarstvo
MONTHLY STATEMENTS mjesena izvjea
DEPOSITS money placed in a bank (depoziti, uplate)
INTEREST RATES kamate stope
INTEREST the price paid for borrowing money, paid to the lenders (kamata)
CASH SHORTAGES nestaica novca, vlada pomae bankama
CAPITAL the money invested in a business (kapital)
SHARES/STOCKS certificates representing part- ownership of a company

(dionice)
BONDS certificates of debt issued by
governments or companies to raise money
MERGER
when one company combines with another one (spajanja)
TAKE OVER BID when one company offers to buy or acquire another one
STOCKBROKING buying and selling stocks or shares for clients
PORTFOLIO all the investments owned by an individual or organization
RETURN the profits made on investments
BANKRUPT unable to pay debts or continue to do business
DEREGULATION the ending or relaxing of legal restictions
CONGLOMERY a group of companies, operating in different fields, which have
joined together

GLASS-STEAGALL ACT (1934-1999) a law that separated commercial banks

and investment banks or stockbroking firms; it prevented commercial banks from
doing investment banking issues. In 1999, GSA was repealed and large banks
became international conglomerates offering a complete range or products that
were previously provided by banks, stockbrokers and insurance companies.

CENTRAL BANKING

Central banks:
implement monetary policy
interest rates
(provode monetarnu politiku)
money

- setting
-print or destroy
- open

market operations
supervise exchange rates (nadzire teajeve)
regulate the credit supply
supervise commercial banks (nadzire poslovne banke)
act as a lender of last resort (djeluje kao zajmodavac u
krajnjoj nudi)

MONETARY POLICY:
EXPANSIONARY POLICY

Problem: ECONOMY IN RECESSION (BELOW ITS FULLEMPLOYMENT POTENTIAL)

Goal: TO STIMULATE THE ECONOMY, TO INCREASE BORROWING
& SPENDING, TO ENCOURAGE OUTPUT
Measures: INCREASING THE MONEY SUPPLY, LOWERING THE
RESERVE REQUIREMENT, BUYING MORE BONDS, DROPPING THE
DISCOUNT RATE, LOWERING INTEREST RATES, EASIER
APPROVALS OF LOANS

RESTRICTIVE POLICY
Problem: OVERHEATING ECONOMY (TOO MUCH PRESSURE ON
PRODUCTION CAPACITY, RISING PRICES)
Goal: TO COOL THE ECONOMY: TO LESSEN LOAN AVAILABILITY,
LOWER INVESTMENTS, TO REDUCE AGGREGATE DEMAND
Measures: REDUCING THE MONEY SUPPLY: RAISING THE
RESERVE REQUIREMENT, SELLING BONDS, INCREASE THE
DISCOUNT RATE, HIGHER INTEREST RATES, LESS AVAILABLE
LOANS

Primjer zadatka:
If the economy is OVERHEATING, the central bank should COOL IT. This can be
done by :

RAISING the reserve requirement,

INCREASING the discount rate
SELLING bonds on the open market

MONETARY AND FISCAL POLICY, pg. 63

FISCAL policy

Reducing taxes and increasing government SPENDING have the same effect
GREATER spending in the economy. The difference is that when you
REDUCE taxes, the extra spending is done by individuals. Governments will do
this if they want to reduce UNEMPLOYMENT the extra spending will
increase DEMAND for products which firms will meet by HIRING more workers.
This is called a(n) EXPANSIONARY FISCAL policy. A problem is
that INFLATION might increase as a result. If the government WISHES to reduce
inflation it might increase taxes or reduce spending a RESTRICTIVE
FISCAL policy. There will be less spending, and firms will MAKE less profit.

MONETARY policy
When the interest RATE is cut, it is cheaper to BORROW money and you get less
interest when you put money in the BANK. So both firms and consumers borrow
and spend MORE and save LESS. What kind of policy is this? EXPANSIONARY
MONETARY POLICY.
Increases in interest rate have the OPPOSITE effect it is better to save than
SPEND, so both firms and consumers spend LESS. What kind of policy is this?
RESTRICTIVE MONETARY POLICY.

CREDIT CRISIS

1. The family contacted a mortgage broker.

2. The mortgage broker connected the family with the mortgage lender (for a
fee/commission).
3. Mortgage lenders granted mortgages to subprime borrowers.
4. Investment banks bought mortgages from mortgage lenders.
5. Investment banks created securities out of the mortgages (MBSs, CDOs).
6. Investment banks sold mortgage-backed securities to different investors
on Wall Street.
7. Many borrowers defaulted on repayment and American house prices fell.
8. The value of MBS then fell and investment banks lost billions of dollars.
9. Some went bankrupt and some were bailed out by the government.
10.There was little capital left for lending and borrowing (this was the credit
squeeze).

Credit squeeze premalo novaca

Collateral jamstvo otplate kredita
Foreclose- zaplijeniti, ovrha
Down payment polog

Default on neplaati, prekriti obvezu

Leverage financijska poluga, financiranje uz zaduivanje
Bailed out spaene
Securities(CDO, MBS) vrijednosni papiri

EXCHANGE RATES
The price at which one currency can be exchanged for another
Currency can be: domestic, stable, foreign, single, weak, strong, convertible,
common
COLLOCATIONS:

(ex)change dollars to Euros

convert dollars to Euros
buy/sell currencies
a currency raises/ falls
a currency appreciates/depreciates
a currency floats/fluctuates

Saetak teksta(odgovori na pitanja sa prezentacije), MK, pg. 128

Exchange rate is the price at which one currency can be exchanged for
another
After WW2, major currencies were fixed against US dollar
1 dollar was worth 1/35 of an ounce of gold
The Fed guaranteed that you can exchange this amount of gold for every
dollar in existence
The values of fixed exchange rates can be changed with the agreement of
the International Monetary Fund

Gold convertibility ended in 1971, after inflation in the USA, because Fed
didn't have enough gold to guarantee its currency
Floating exchange rates exchange rates are determined by demand and
supply
If there are more sellers than buyers, value od currency will fall.
Milton Friedman said that currencies would automatically settle a stable
rates which would reflect economic realities more precisely than
calculations by central bank, but he underestimated the extent of
speculation
Exchange rates should, in theory, reflect PPP(purchasing power parity)
PPP- the cost of given selection of goods and services would be the same
in different countries, so if the price in a country increases because of
inflation, its currency should depreciate-its exchange rate should go down
as to return to PPP
Currency speculating is buying and selling of currencies for the purposes of
profiting on the changes in exchange rates
5% of world currency transactions are believed to be related to trade
Effects of exchange rate changes caused by speculation can cause
problem for any industry
Traders can hedge against currency fluctuations by way of futures
contracts
Forward planning can be difficult when price of materials bought from
abroad can rise or fall rapidly all this was a major reason for the
establishment of the euro
Governments and central banks can sometimes try to change the value of
their currency they intervene in exchange markets, using their foreign
currency reserves to buy their own currency to raise its value
In 1992, the Bank of England lost over 3 billion pounds in one day trying to
protect the value of the pound sterling

INSURANCE

Pemium cijena osiguranja

Claim teta
Claims adjuster The person who investigates insurance claims and inspects
damage to determine the company's liability (procjenitelj tete)
Underwritter The person who evaluates the risks of insuring a person or asset
and uses that information to set the price for insurance policies (procjenitelj
rizika)
Quotes a premium dati ponudu
Complete a claim form ispuniti odtetni zahtjev
Broker The person who is not employed in an insurance company. S/he works
independently and offers insurance policies offered by different insurers (prodaje
vie polica osiguranja)
Agent An insurance company's representative. S/he works for the insurance

company and sells its insurance (prodaje samo jednu od jedne firme)
The insured- person or business who is covered by an insurance policy

STEPS:
1. you decide to insure something against an accident/theft/ damage (you
seek insurance cover)
2. you find an insurance agent or broker
3. you contract an insurance policy and pay a premium for the insurance
cover
4. you file/submit a claim in case of an accident
5. the claims adjuster evaluates the damage
6. the insurance company settles a claim (or: pays compensation)