LCCI level 4 rok 2004.pdf

English for Business

Level 4

Past Papers 2004

London Chamber of Commerce and Industry Examinations Board (LCCIEB)

Platanenstr. 5

07549 Gera

Tel: 0365 / 7 38 85 19

Fax: 0365 / 7 38 85 36

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Email: info@lccieb-germany.com

Contents

English for Business

Level 4

Past Papers 2004

Series 1 ………………………………………………………………………………………3 - 10

Series 2 ……………………………………………………………………………………..11 - 19

Series 3 ……………………………………………………………………………………..20 - 28

Series 4 …………………………………………………………………………………….29 – 37

Model Answers for some papers are available free of charge. Contact info@lccieb-

germany.com

The material contained in this booklet may be reproduced and/or photocopied for

examination preparation purposes only.

SERIES 1 EXAMINATION 2004

ENGLISH FOR BUSINESS

LEVEL 4

(Code No: 4041)

THURSDAY 11 MARCH

________

Instructions to Candidates

(a) The time allowed for this examination is 3 hours.

(b) Answer all 4 questions.

(d) All answers must be clearly and correctly numbered but need not be in numerical order.

(e) While formal accuracy is expected, adequate and appropriate communication is essential and

candidates must judge the length of their answers in this light.

(f) When you finish, check your work carefully.

(g) The use of standard English dictionaries and cordless non-programmable calculators is

permitted. Candidates whose first language is not English may use a bilingual dictionary.

______

QUESTION 1(a)

Task

Read the following article and answer the questions that follow it. Credit will be given for answering

the questions in your own words and demonstrating comprehension, rather than quoting directly from

the text.

The Data Revolution

Managers use data the same way a drunk uses a lamp post: for support, not illumination.

We all know how to create a spreadsheet to support a business proposal. We start at the bottom

right hand corner. So if senior management or investors want a return of 15%, we make sure there

is a plausible-looking 15.7% in the bottom right-hand corner of the spreadsheet. With the wonders

of spreadsheet software, we can go on changing assumptions, growth rates and costs until the

desired result is achieved. We want the data to support us: whether it provides any real illumination

on the business proposal is irrelevant to us.

It is not only middle managers – CEOs are just as guilty as the drunkard. Even reputable

businesses use a whole panoply of accounting techniques to massage the figures. Goodwill write-

offs, capitalisation of expenses and one-off charges alone give plenty of room for manoeuvre. Last

year, 247 of the top 500 companies reported one-off items that never really seemed to be one-off.

One blue chip company announced EBITDA profits (earnings before interest, tax and depreciation)

of £7 billion. To the cynical these are earnings before the bad stuff: the next step is to announce

earnings before costs. Closer inspection of the accounts showed that in the same period, the

company announced a £10.6 billion loss, defined as retained loss for the company and its share of

joint ventures and associated undertakings. There was nothing underhand about this – not

surprisingly the company chose to highlight the £7 billion rather than the £10 billion, but hey! what’s

£17 billion between friends?

Playing the numbers game is as old as management itself. But there are three possible reactions:

challenge, credibility and control.

Challenge

Most managers realise that spreadsheets are no more than a starting point for discussion.

Experienced managers have highly-tuned garbage-detectors which can recognise rogue numbers

and implausible assumptions in a plan. Managers should test assumptions in order to throw light on

data which the spreadsheet itself does not illuminate.

Credibility

Venture capitalists and many senior executives judge a plan largely on the credibility of the people

presenting it. If a successful executive with a track record of over-delivering against promises

produces a marginal plan, it is likely to be more acceptable than an exciting plan produced by an

executive who has not delivered in the past. This clearly makes it essential for managers and

businesses to maintain their reputation for integrity and delivery.

Control

Greater control is a trap. A typical reaction to manipulated data is to seek ever tighter controls and

ever more detailed rules about how data can be presented. But, like the generals who always fight

the last war, the rules are rarely able to keep up. Increasing bureaucracy to enforce the rules slows

down decision making, but does not prevent the creativity of management in finding ways to make

the data support their case. Some control is essential, but it is not a substitute for intelligent

challenge and high credibility.

4041/1/04

QUESTION 1(a) CONTINUED

Effective managers will always be strong advocates of their business, so they will always use data

to support their businesses. They should not be denied the right to be cheerleaders for their

business through ever greater control and bureaucracy. Data only becomes illuminating when it is

tested and the assumptions behind the data are challenged. While the drunk can only use the lamp

post for support, strong managers know how to use data for support and illumination.

( Adapted from an article in Business Age magazine)

(i) Explain in your own words the general meaning of the metaphor about the drunk.

(2 marks)

(ii) What is meant by the ‘wonders of spreadsheet software’ (Para. 2)?

(2 marks)

(iii) In relation to manipulating the figures:

(1) What is the significance of the example about ‘one-offs’?

(2 marks)

(2) Why is the next step ‘earnings before costs’?

(2 marks)

(iv) Which two types of managers are contrasted in the paragraph on 'Credibility' and in what way are

they contrasted?

(2 marks)

(v) Explain in your own words why, according to the writer, “Some control is essential, but it is not a

substitute for intelligent challenge and high credibility”.

(2 marks)

(vi) Explain what is meant in this context by the following phrases:

(1) garbage-detector (paragraph 5)

(2) generals who always fight the last war (paragraph 7)

(3) cheerleaders (last paragraph)

(3 marks)

(15 marks)

QUESTION 1(b)

Situation

You are a senior manager in a company. You are becoming increasingly concerned about the way

company results are being manipulated to present the best, but not always the most accurate, image

of the state of the company. You feel that the credibility of the company is in danger of being

damaged if this continues. The senior management have decided to hold a two-day discussion and

training workshop on the issue which all middle management must attend.

Task

Using ideas from the text above, write a memo to the middle management of the company to outline

the problem, the opinion of senior management and to give notice of the workshop intended to

address it.

Invent any further content as necessary.

(10 marks)

(Total 25 marks)

4041/1/04

OVER

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