lOMoARcPSD|6197521

Exam 2010 questions

Business English (Universiteit Twente)

StuDocu is not sponsored or endorsed by any college or university

Downloaded by Lê Thanh Ngân ([email protected])
 lOMoARcPSD|6197521

Business English Review Test 2: VERSION A

The Business Chapters 3 Supply Chain and 7 Investment
BVIU Chapters 12, 13, 14, 15, 38, 39, 40, 41, 42, 43, 44, 45

*** YOU MAY WRITE ON THIS QUESTION SHEET ***

THIS QUESTION SHEET MUST BE RETURNED AT THE END OF THE TEST

*** NO DICTIONARIES, PHONES, ELECTRONIC DEVICES ***

On your answer form, write in block letters:

- your name
- student ID number
- course name (Business English)
- course code (Your Group Letter: A-H)
- exam date (25-01-2011)
- version (A or B written at the top right corner of this paper)

THE BUSINESS: Chapter 3, Supply Chain and Chapter 7, Investment

Part 1: Ch. 3 Reading- Topic information, Scanning (main ideas), Skimming (specifics)
Read the following extract from an article about the Bullwhip Effect in supply chain
management. For each question choose the correct answer.

The Bullwhip Effect in supply chain management

Supply chains need to be managed because they are not inherently stable. Demand is never
consistent and demand variability tends to increase as one moves up the supply chain away
from the retail customer. In periods of rising demand, down-stream participants increase orders.
In periods of falling demand, orders fall or stop as clients seek to reduce inventory. The effects
of each oscillation are amplified as one moves upstream in the supply chain (further from the
customer), rather like someone cracking a whip, from which the phenomenon gets its name.

The causes of the Bullwhip Effect are many and varied. Natural causes such as quality
problems, strikes, plant fires, and variability in demand coming up the supply chain, coupled
with time delays in the manufacturing and shipping of goods coming down it all contribute.
There are also other, additional causes including, for example purposely neglecting to order in
an attempt to reduce inventory or overreacting to backlogs. Free return policies, should
companies be unwise enough to have any, can also create havoc. However, the main culprits
are often the measures that both suppliers and customers take to reduce costs, such as, for
example, the supplier sending out batches of orders together in order to take advantage of full
truck load economies. The downside of this as far as supply chain management is concerned is
that larger orders result in greater variance. Sales promotions can also contribute to demand
distortions and often result in retailers forward buying to benefit more from lower prices. These
demand oscillations can launch a ‘mad scramble’ in manufacturing with an accompanying need
to acquire and expedite more raw materials and reschedule production.

When customers do not have confidence in the supplier’s ability to deliver orders rapidly and
reliably, they tend to behave in certain ways which also have a destabilizing effect on the
supply chain. For example, they order more than they need during a period of short supply,
hoping that the partial shipments they receive will be sufficient. When product availability is
considered satisfactory, they might cancel the balance of future orders with their supplier, who

Downloaded by Lê Thanh Ngân ([email protected])

 lOMoARcPSD|6197521

may be left with a lot of surplus stock as a result. Demand forecast inaccuracies – there is a
tendency for everyone in the chain to add a certain percentage to the demand estimates –
exacerbate the problem and the result is that there is no visibility of true customer demand.

In the past, the bullwhip effect has been accepted as normal, and in fact, thought to be an
inevitable part of the order-to-delivery cycle. However, such are the pernicious effects on
business performance that modern companies are increasingly seeking counter-measures to
overcome it by improving their understanding of the product demand patterns at each stage of
the supply chain. Smart companies know how to find solutions such as, for example, countering
full truck load economics by using third party logistics suppliers or sending out assorted
truckloads. Introducing regular, more frequent delivery appointments results in smaller orders
and smaller variance, but doesn’t affect the amount the customer orders, whilst offering
products at consistently good prices minimizes buying surges brought on by temporary
promotional discounts.

These are just a few examples of strategies that companies have adopted. The Bullwhip Effect
is such a complex phenomenon that it is only possible to counteract it by a continual and on-
going process of research and evaluation. Unfortunately, it is the kind of problem that evolves
as a company grows and its supply chain systems evolve and become more complex. To be
successful, it is essential to evolve your solutions with it.

1 What is the bullwhip effect?

a) When companies increase their orders in times of rising demand.
b) The tendency for supply to be greater than demand.
c) The tendency for oscillations in supply and demand to escalate.
d) When orders decrease in periods of falling demand.

2 According to paragraph two, what is the main cause of the Bullwhip Effect?
a) Purposefully neglecting to order.
b) Cost reducing measures.
c) Free returns policies.
d) Natural causes.

3 According to paragraph two, what are the negative effects on the supply chain of full
truck-load economies?
a) Companies don’t save as much money as they believe they will.
b) Larger truck loads result in greater variance in orders.
c) Larger truck loads create problems for logistics companies.
d) Customers order too much and then expect to take advantage of free returns policies.

4 According to paragraph three, under what circumstances do customers tend to over-

order?
a) When they want to save money.
b) When they have lost confidence in the logistics company.
c) When the cancel the balance of future orders.
d) When they feel they can’t rely on the supplier to deliver their orders reliably and
quickly.

Downloaded by Lê Thanh Ngân ([email protected])

 lOMoARcPSD|6197521

Part 2: Ch. 3 Grammar- Spot the errors: Noun Phrases, Relative Clauses, and more.
Read the sentences below about supply chain management in the automobile industry.
In each sentence there may be one extra word or error that is either grammatically incorrect or
does not fit in with the meaning of the text. Some lines, however, are correct.
If a line is correct, choose the letter marked CORRECT.
If there is an extra word or grammar error, choose the best letter that indicates the error.

Supply chain management in the automobile industry

Example:
In the past, car manufacturers used to buy a huge number of components and assemble
them in house to make it all the modules needed in a car.
a) CORRECT
b) used to buy
c) it
d) all

Answer: c) it
Correct use: The word “it” is not necessary -“In the past, car manufacturers used to buy a huge
number of components and assemble them in house to make all the modules needed in a car.”

5 Nowadays, they can purchase the finished modules from of specialized suppliers and put
a car together with these.
a) CORRECT
b) of
c) from
d) with

6 Under the old system, it was difficult to manage all the different processes and still
maintain well quality.
a) CORRECT
b) well
c) still
d) processes

7 For modern car manufactures, the supply and delivery of the different components and
modules is the biggest challenge.
a) CORRECT
b) is
c) challenge
d) of

8 Plants will buy a whole module, like the dashboard or the door from a first-tier
supplier, that would have bought the necessary small parts and components from a
second-tier supplier, that would have purchased their materials from a raw materials
supplier.
a) CORRECT
b) would have
c) will buy
d) that

Downloaded by Lê Thanh Ngân ([email protected])

 lOMoARcPSD|6197521

9 A small cluster of suppliers often grow up around from the plant, and these provide
employment for local people and skills that transfer to the low-cost country.
a) CORRECT
b) up
c) from
d) that

10 The other significant ‘players’ in the supply chain are all the logistics partners, the
companies who handle transport and warehousing, and the providers for financial
services.
a) CORRECT
b) who
c) for
d) are

11 The latter are for the benefit of customers which might require credit services to help
them purchase vehicles, or which prefer to lease rather than buy.
a) CORRECT
b) for
c) which
d) than

Part 3: Ch. 3 Vocabulary

For each question choose the best vocabulary to complete the sentence.

12 Each hospital must __________ supplier capabilities and products before signing long-
term contracts.
a) reposition
b) validate
c) source
d) stock

13 In the return situation, there must be a convenient point of collection for receiving the
goods or to remove these goods from the supply chain. This process step can require
inspection, re-packaging, storage, and __________ of any residual value that might exist.
a) stocking
b) transportation
c) auditing
d) salvage

14 The client wanted to __________ its products in a way that would make them easier for
customers to understand and to buy and would justify its price levels compared with
those of the competition.
a) re-position
b) stock
c) salvage
d) source

Downloaded by Lê Thanh Ngân ([email protected])

 lOMoARcPSD|6197521

15 Are your suppliers doing what they say they are doing? The only way to verify that is
to conduct a supplier __________ of their facility. Most suppliers will allow you to
examine their facility and review their procedures, especially if they want to keep your
business, or start providing you with products or services.
a) sourcing
b) outlet
c) audit
d) logistics

Part 4: Ch. 7 Reading- Topic information, Scanning (main ideas), Skimming (specifics)
Read the extract from an article about hedge funds management.
For each question choose the correct answer.

Understanding hedge funds

Hedge funds are private investment funds which are only open to a limited range of investors,
the number of which is determined by its regulators, but is restricted by law to no more than
100 investors per fund. They are special in that they are exempt from many of the rules and
regulations governing other mutual funds, and this allows them to undertake a wider range of
trading activities and employ more aggressive strategies than are normally permitted. As a
consequence of the restricted number of investors, most hedge funds set an extremely high
minimum investment amount, ranging from $250,000 to as much as $1 million. Investors also
have to pay an annual performance fee to the investment manager, as is standard practice for
mutual funds; however hedge funds also collect a percentage of the profits (usually 20 %).

The underlying philosophy of hedge funds which originated on Wall Street in the 1940s as an
investment option for the extremely wealthy, is wealth preservation. They operate on the
principle of absolute return, of making money on an ongoing basis, regardless of market
fluctuations. This is an attractive proposition for investors and hedge fund activity has
increased greatly over the last 15 years. No longer the exclusive territory of individual
investors, some hedge funds now also offer their investment capabilities to professional
investors such as insurance companies and pension funds. At the same time, the range of
different investment strategies, some of them high risk, that hedge fund managers typically
employ to achieve their aggressive investment goals have become more widely practiced in the
financial markets. Notably, these include extensive dealing in derivatives, short selling or
‘selling short’, and leveraging.

Short selling was one of the strategies employed by billionaire businessman and hedge fund
manager George Soros who generated an estimated $1.1 billion for his hedge fund, the
‘Quantum fund’, in 1992, forcing the pound out of the European exchange mechanism in the
process. It is a technique for profiting from the falling price of stock and involves borrowing a
security from a broker and selling it with the understanding that it must later be bought back
(hopefully when the market has dropped and at a lower price) and returned to the broker. For
example, a hedge fund manager will task the fund’s brokers to borrow a certain number of
shares of a company or companies which they believe are overpriced and will fall. The fund
manager will then immediately sell the borrowed shares at the current market price. If the price
of the shares drops, the fund manager buys back the shares and the brokers return them to the
lender. The profit is the difference between the price at which the stock was sold and the cost to
buy it back, minus commissions and expenses for borrowing the stock. It is an effective
technique for getting a positive return in a falling market but can be high risk; if the prices
increase rather than decrease, the potential losses are unlimited.

Downloaded by Lê Thanh Ngân ([email protected])

 lOMoARcPSD|6197521

Derivatives are another means employed by fund managers to ‘hedge their bets’ against market
direction. They are essentially contracts that gamble on the future prices of assets by making a
contract for future trading at a specified price, the buyer and seller standing to gain or lose
according to whether the market has dropped below the price agreed or risen above it.
‘Options’ and ‘futures’ are common currency in derivatives trading. A ‘future’, or forward
contract, is formed when both the buyer and the seller are committed and legally obliged to
exchange the asset when the contract matures. An ‘option’, on the other hand, is a contract that
gives its owner the right, but not the obligation, to buy or sell the asset on or before a given date
at the agreed-upon price. Leveraging, that is borrowing money to increase the fund’s trading
capacity, is also common practice for hedge funds. There are obvious associated risks; however
leveraging can increase the shareholders' return on their investment and often there are
additional tax advantages associated with borrowing.

So, are hedge funds a sure-fire way to maximum returns on investment? According to
HedgeFund Intelligence, the industry information group, the average return on European hedge
funds can be as little as less than 10%; this compares unfavorably with the return of 18.1%
posted by ordinary European equity funds. However, hedge funds fared much better in the bear
markets of, for example, 2001, 2002 and 2008. While the stock market was down 45% in the
first two periods mentioned, hedge funds were up by between one per cent and two per cent.
Because hedge funds aim for absolute returns, they tend to perform better than the stock market
in bad times, such as periods of economic recession, but less well in good times.

16 Why does the minimum investment for a hedge fund tend to be high?
a) They are an investment mechanism only for the very wealthy.
b) The amount is determined by the fund’s regulators.
c) This includes the fund manager’s fee.
d) The number of investors is restricted.

17 According to paragraph two, what does the principle of ‘absolute return’ entail?
a) Maximizing profit.
b) Setting the losses off against the profits as the market fluctuates.
c) Always making a profit whether the markets move up or down.
d) Accepting heavy losses for the sake of even more substantial future gains.

18 How did George Soros make $1.1 billion for the Quantum fund?
a) By short selling huge amounts of borrowed sterling at a time when the market was
falling.
b) By buying cheap shares and selling them back when the price went up.
c) By short selling huge amounts of borrowed shares when the market was falling.
d) By betting on the stock market.

Part 5: Ch. 7 Grammar- Spot the errors: Conditionals.

Choose the best word to complete each sentence.

19 __________ someone informed us that this was going to take place, we could have
properly prepared for it.
a) Should
b) What
c) Had
d) Were

Downloaded by Lê Thanh Ngân ([email protected])

 lOMoARcPSD|6197521

20 __________ an agreement be reached, Vevo would likely be the largest music-oriented

site on the Web.
a) Should
b) What
c) Had
d) Were

21 __________ I would like you to discuss with our suppliers is the current pricing
structure and how we can make changes that would benefit everyone involved.
a) Should
b) What
c) Had
d) Were

Part 6: Ch. 7 Vocabulary

For each question choose the best vocabulary to complete the sentence.

22 Warren Buffet’s __________ against market volatility is about $11 billion dollars in
cash.
a) sure-fire investment
b) buffer
c) defensive stance
d) equities

23 South Korea's central bank, which has a total $200 billion in reserves, said in a report
to a parliamentary committee on Feb. 18 that it will __________ investments in assets
denominated in currencies such as the Australian and Canadian dollars.
a) go pear-shaped
b) entail
c) diversify
d) recoup

24 If you are __________, retired or nearing retirement, or just not that fond of losing
money, you probably view stocks as the financial equivalent of an atomic bomb.
a) exposed
b) quids in
c) down shifting
d) risk averse

25 A new report shows that the world's high-net-worth individuals (HNWIs) were able to
__________ in 2009 almost all of the wealth that they lost in 2008 during the height of the
financial crisis.
a) buffer
b) recoup
c) diversify
d) boost

Downloaded by Lê Thanh Ngân ([email protected])

 lOMoARcPSD|6197521

Part 7: Vocabulary - BUSINESS VOCABULARY IN USE

Chapters: 12, 13, 14, 15, 38, 39, 40, 41, 42, 43, 44, 45
For each question choose the best vocabulary to complete the sentence.

26 Cabela's Men's GORE-TEX Trailhead Jacket offers high-end __________

with a waterproof, breathable GORE-TEX Performance Shell fabric.
a) expectations
b) value
c) technical durability
d) serviceability

27 Quantal's new eaves beam is a unique product innovation that delivers structural
performance without detracting from the product's __________.
a) aesthetics
b) perceived quality
c) value
d) defects

28 Merck’s latest anti-clotting medication meets __________ proving its efficacy and
reliability, but it has not been used in clinical settings.
a) measurable objectives
b) training effectiveness
c) regulatory requirements
d) customer satisfaction

29 Hiroyuki Myojin, the president of a local fish processing factory in Japan, envisions a
future in which __________ fisheries and aquaculture (or fish farming) thrive along with
the communities that depend on them.
a) quality management
b) environmentally sustainable
c) fit-for-purpose
d) statutory

30 U.K. based John Lewis believes that being a responsible retailer means respecting the
interests of all their __________, and this involves listening to them, responding to their
concerns, being honest in the company’s expectations and fair in how they report the
company’s performance.
a) stakeholders
b) processes
c) resources
d) investors

31 British American Tobacco has developed a __________ process to predict how new
applications will run on its global network.
a) competitive benchmarking
b) Six Sigma quality
c) Two Sigma quality
d) benchmarking

Downloaded by Lê Thanh Ngân ([email protected])

 lOMoARcPSD|6197521

32 Because there is no National Benchmark for MRSA (Methicillin Resistant Staph

Aureus), Renown Regional Medical Center uses __________ to measure infection rates
among its patients. This measurement is 0.46/1000 hospital days.
a) functional benchmarking
b) internal benchmarking
c) benchmarking
d) competitive benchmarking

33 The profit and loss account, balance sheet, and cashflow statement are the three key
__________ in financial reporting.
a) bonds
b) finances
c) financial statements
d) shareholders

34 Nama Chemicals, one of the leading petrochemical producers in the region, has
announced its __________ results for Q4.
a) dividends
b) annual report
c) preliminary results
d) balance sheet

35 Scott and Lisa operate “A Stitch in Hide”, a leather repair shop. They're hired to
repair an antique leather couch, and they finish their job on December 15, 2010. They bill
the customer for $750, which they receive on January 20, 2011. Because they use the
__________ method of accounting, Scott and Lisa count the $750 income in December
2010, the date they earned the money by finishing the job. This income must be reported
in their 2010 tax return even though they don't receive the money until 2011.
a) sales
b) general expenses
c) cost of goods sold
d) accruals

36 The Honda Jazz was Britain's best car for retaining its value during 2009 according to
Parker's annual report. According to our research the Jazz loses about £3.78 per day in
__________ - about the same as a coffee and a snack at a cafe.
a) interest payable
b) loss
c) profit
d) depreciation

37 Insider Trading Investment Prohibition: In summary, directors, officers and

employees of the Company must not, whether in their own capacity or as an agent for
another, subscribe for, purchase or sell, or enter into an agreement to subscribe for,
purchase or sell, any __________ in the Company, or procure another person to do so.
a) securities
b) physical assets
c) carried items
d) tangible assets

Downloaded by Lê Thanh Ngân ([email protected])

 lOMoARcPSD|6197521

38 According to an internal document on the website of Coface, a world leader in trade-

risk management, “broken promises are the best indicator that a
customer account is turning troublesome. If a customer breaks a promise more than three
times, then that customer has become a __________.”
a) debtor
b) bad debt
c) amortization
d) depreciation

39 Typical __________ include such accrued expenses as wages, taxes, and interest
payments not yet paid; accounts payable; short-term notes, etc.
a) assets
b) equity
c) current liabilities
d) overdrafts

40 Fry Transport is estimated to owe __________ 1.5 million pounds.

a) creditors
b) shareholders
c) owners
d) debtors

41 If your company needs additional funds from time to time, __________ are available
for Adam & Company current account customers over the age of 18.
a) liabilities
b) bonds
c) overdrafts
d) long-term bank loans

42 Nestle Malaysia's __________ in 2009 included purchasing 163,282,000 Malaysian

ringgits worth of property, plant and equipment.
a) net cashflow from operations
b) net cashflow from investment activities
c) net cashflow from financing activities
d) net cash position

43 Nestle Malaysia's __________ in 2009 included a profit of 341,086,000 Malaysian

ringgits before taxation.
a) net cashflow from operations
b) net cashflow from investment activities
c) net cashflow from financing activities
d) net cash position

44 CEO Peter Voser commented that Shell is focusing on continuous improvements in

__________, with an emphasis on safety and costs, including company plans for $1 billion
of cost savings in 2010, and staff reduction of some 2,000 positions by end-2011.
a) return on assets
b) investment ratios
c) capacity
d) operating performance

10

Downloaded by Lê Thanh Ngân ([email protected])

 lOMoARcPSD|6197521

45 Cory's Tequila Co. is earning a very respectable 10% __________ of total shareholder
investments. That equals ten cents of assets that are created for each dollar that was
originally invested.
a) net income
b) investment ratio
c) return on equity
d) profit

46 The more long-term debt a company has, the more __________ a company is, the
riskier it is as an investment.
a) heavily leveraged
b) full capacity
c) sweating its assets
d) operating at full capacity

47 The Governor of the Bank of England, Mervyn King, stated that the UK economy still
had a “substantial margin of __________" reflected by a combination of rising oil prices
in 2009, weaker Sterling over the past three years, historically low interest rates, an
increase in VAT (Value Added Tax) from 15% to 17.5%, and some £200 billion of cash
pumped into the economy.
a) assets
b) spare capacity
c) equity
d) debt

48 Dominos’ Pizza had a Net Profit After Tax of $9.1 million. With 63.1 million shares
held by investors, the company's Retained Earnings was $2.37 million:
(9.1-2.37)/63.1 = 0.11 cents per share. In other words, the __________ that Domino's gave
each shareholder was 0.11 cents per share.
a) return in investment
b) dividend per share
c) retained earnings
d) shares outstanding

49 The S&P 500 stock index has given a 10% average annual __________ over 15 years,
with annual performance ranging from -23% in 2002 to +34% in 1995.
a) earnings
b) dividend payouts
c) income shares
d) return on investment

50 Activist investor Knight Vinke accused HSBC bank of __________ a loss of $30 billion
in its U.S. sub-prime mortgage assets.
a) understating
b) overstating
c) misleading
d) cooking

11

Downloaded by Lê Thanh Ngân ([email protected])