DSCG 6 ANGLAIS DES AFFAIRES FICHES DE RÉVISION

Nadine Audabram Agrégée d’anglais Professeur au lycée Paul Sabatier, Carcassonne

Cécile Lienhard Agrégée d’anglais Professeur en classes préparatoires à l’expertise comptable au lycée Ozenne, Toulouse

leader de l’expertise comptable Crédits iconographiques p. 35 : © corporate by glyph.faisalovers from the Noun Project ; © Government by Aham Brahma from the Noun Project ; p. 72 : © international by mungang kim from the Noun Project ; p. 84 : © manager by Adrien Coquet from the Noun Project ; © firm by Nithinan Tatah from the Noun Project ; © Crowdfunding by Alice Design from the Noun Project ; p. 186 : © web by Adrien Coquet from the Noun Project ; p. 219 : © welfare by Nithinan Tatah from the Noun Project ; © Community by ProSymbols from the Noun Project ; p. 233 : © internal by Shaa from the Noun Project ; © External Link by Ahock from the Noun Project ; p. 234 : © Announcement by Justin Blake from the Noun Project ; © App by Wing from the Noun Project ; © selection by Magicon from the Noun Project ; © testing by AS Design from the Noun Project ; © job interview by Arafat Uddin from the Noun Project ; © contract by Nawicon from the Noun Project ; © Check by Sarah from the Noun Project ; © destination by b farias from the Noun Project ; © invite by Gan Khoon Lay from the Noun Project ; p. 240 : © manager by Round Pixel from the Noun Project ; © people by sultan mohammed from the Noun Project ; p. 253 : © employees by mungang kim from the Noun Project ; © employees by mungang kim from the Noun Project ; © dashboard by Kirby Wu from the Noun Project ; © Culture by Adrien Coquet from the Noun Project ; p. 286 : © chemical by iconsmind.com from the Noun Project ; © basic by Flatart from the Noun Project ; p. 300 : © direct by Adrien Coquet from the Noun Project ; © Retail by Alice Design from the Noun Project ; © Wholesale Trade by Felicity Meade from the Noun Project ; © mediator by Rflor from the Noun Project ; p. 301 : © competition by Symbolon from the Noun Project ; p. 319 : © Social Media by Evon from the Noun Project ; © web browser by Rahmat Hidayat from the Noun Project ; © shopping by Jeehan@design from the Noun Project ; © Shopping Cart by Anthony Bossard from the Noun Project ; © people by Colleen Cameron from the Noun Project ; © TV by Adrien Coquet from the Noun Project ; © ads by Smalllike from the Noun Project ; © Newspaper by Gan Khoon Lay from the Noun Project ; © Radio by Hare Krishna from the Noun Project ; © question mark by Milinda Courey from the Noun Project ; p. 340 : © bar graph by Made by Made from the Noun Project ; © Flow Chart by Juan Pablo Bravo from the Noun Project ; © Pie Chart by leo-graph.com from the Noun Project ; p. 341 : © Radar Chart by Sam Smith from the Noun Project ; © Scatter Plot by Becris from the Noun Project ; © Venn Diagram by Jeremy Paris from the Noun Project Maquette de couverture : Hokus Pokus Maquette intérieure : Yves Tremblay Mise en page : Nord Compo Relecture en langue anglaise : Sacha Wilson Suivi éditorial : Maxine Pouzet

Les liens proposés tout au long de ce livre sont des compléments d’information. Vous pouvez soit flasher les QR-codes, soit copier-coller les URL raccourcies dans votre navigateur. Ces liens resteront valables durant toute la période de commercialisation de l’ouvrage. Toutefois, nous ne pouvons en garantir la pérennité dans la mesure où les pages auxquelles ils renvoient sont la propriété des sites qui les hébergent. © Dunod, 2021 11 rue Paul Bert, 92240 Malakoff www.dunod.com ISBN 978-2-10-081171-7 Sommaire Avant-propos………………………………………………………………………………… 5

Partie A – Thèmes au programme FICHE A.1 Banking …………………………………………………………………………11 FICHE A.2 Venture capital and business plans ……………………………………… 23 FICHE A.3 Bonds, mortgage and investment funds………………………………… 35 FICHE A.4 Stocks and shares…………………………………………………………… 47 FICHE A.5 Derivatives and spread-betting…………………………………………… 63 FICHE A.6 International financial market……………………………………………… 71 FICHE A.7 Financial disclosure (principles and contents)…………………………… 83 FICHE A.8 Accounting standards, frameworks and principles……………………… 89 FICHE A.9 Financial statements………………………………………………………… 99 FICHE A.10 Intangibles and their assessment………………………………………… 109 FICHE A.11 Management control and audit…………………………………………… 119 FICHE A.12 Management accounting systems (MASs) and performance………… 127 FICHE A.13 Stakeholders………………………………………………………………… 137 FICHE A.14 Governance and styles of governance…………………………………… 147 FICHE A.15 Information systems (composition and use)…………………………… 159 FICHE A.16 Digital devices and big data………………………………………………… 167 FICHE A.17 Security and quality of IS…………………………………………………… 175 FICHE A.18 Management and information & communication technology (ICT)……… 185 FICHE A.19 Management and managerial strategies………………………………… 193 FICHE A.20 Work and motivation ……………………………………………………… 205 FICHE A.21 Company structure………………………………………………………… 215 FICHE A.22 Managing across cultures…………………………………………………… 225 FICHE A.23 Recruitment ………………………………………………………………… 231 FICHE A.24 Communication……………………………………………………………… 239 FICHE A.25 Strategy and business growth……………………………………………… 251 FICHE A.26 Production and manufacturing…………………………………………… 261 FICHE A.27 Logistics and supply chain management………………………………… 269 FICHE A.28 Quality and quality management………………………………………… 277

3 FICHE A.29 Innovations and R&D……………………………………………………… 285 FICHE A.30 Products and brands………………………………………………………… 291 FICHE A.31 Marketing and promotion…………………………………………………… 299 FICHE A.32 Advertising and communication…………………………………………… 307 FICHE A.33 Marketing and ICT…………………………………………………………… 317

Partie B – Méthodologie de l’épreuve orale FICHE B.1 Optimiser sa compréhension des textes………………………………… 327 FICHE B.2 Problématiser et structurer son exposé…………………………………… 329 FICHE B.3 Réussir sa présentation orale……………………………………………… 331 FICHE B.4 Survivre à l’entretien ………………………………………………………… 333 FICHE B.5 Se bâtir une solide connaissance de l’actualité…………………………… 335 FICHE B.6 Devenir « fluent » en moins de temps qu’il ne faut pour le dire……… 337 FICHE B.7 Analyser une infographie…………………………………………………… 339

Annexes ANNEXE 1 Table de correspondance : grammar and reading tips ……………… 347 ANNEXE 2 Les sons de l’anglais………………………………………………………349

Principales abréviations utilisées dans l’ouvrage •• colloq. : colloquial •• sb : somebody •• $ : dollar •• pl. : plural / pluriel •• sth : something •• £ : livre sterling •• qqn : quelqu’un •• UK : usage britannique •• qch : quelque chose •• US : usage américain Avant-propos

Bienvenue dans l’univers des fiches de révision Expert Sup ! Retrouvez l’essentiel du programme en cinq mots-clés.

1 Mobiles Les fiches sont détachables ! Elles permettent donc de réviser en toutes circonstances pour des usages variés : glissées dans le manuel, en complément du cours, à emporter partout pour optimiser votre temps (dans les transports, entre deux cours…), etc.

#Détachable #Pratique #Utile #Nomade

2 Simples La structure des fiches est basique et claire. Chaque fiche comporte des titres et rubriques aisément repérables, des mots-clés, des notions essentielles surlignées.

#Clair #Concis #Efficace #PrêtÀRéviser

3 Visuelles Les fiches détachables Dunod reprennent l’essentiel du cours comme vous auriez pu le faire. Les informations les plus importantes ont été sélectionnées et mises en avant dans les rubriques ou surlignées dans le texte. Des schémas, tableaux et autres synthèses facilitent la mémorisation du cours.

#Synthétique #Visuel #Structuré

4 Ergonomiques La navigation d’une fiche à l’autre est aisée : les nombreux renvois vous guident et vous permettent de progresser à votre rythme tout en liant les notions du programme. La lecture n’est donc pas nécessairement linéaire.

#Souple #Complémentaire

5 Fidèles au programme 100 % conformes au nouveau programme applicable depuis la rentrée 2019, les fiches couvrent toutes les notions incontournables. À la fin de chaque fiche, la rubrique « Le + de l’expert » vous offre de précieux conseils pour faire la différence­ lors de l’épreuve.

#Fiable #RéussiteAssurée

5 Tous les outils pour aborder l’épreuve en confiance

L’épreuve d’anglais des affaires Dans le cadre de la réforme du cursus d’expertise comptable, l’épreuve d’anglais des affaires a été profondément remaniée. Il s’agit d’une épreuve orale ayant pour objectif d’évaluer la capacité du candidat à maîtriser l’anglais des affaires. Il est attendu du can- didat qu’il présente et défende un point de vue à partir d’un document écrit en langue anglaise portant sur une thématique de gestion-management. Affectée d’un coefficient 1 (15 ECTS), l’épreuve dure 1 heure 30. La première heure est dédiée à la préparation du candidat. Celui-ci doit analyser un document en langue anglaise d’une longueur comprise entre 450 et 600 mots pouvant inclure des données chiffrées (graphique, tableau, etc.), qui porte sur les thématiques au programme. Une fois ce temps de préparation écoulé, le candidat dispose de 15 minutes maximum pour présenter un bref résumé du texte relevant les points importants afin de répondre à l’oral, de manière problématisée et structurée, à la question qui lui a été soumise. S’en- suit un entretien en anglais de 15 minutes maximum au cours duquel le candidat répond aux questions qui lui sont posées par le jury. La commission d’examen pour l’épreuve du DSCG 6 est composée de deux enseignants, dont au moins un professeur d’anglais.

Les réflexes à adopter Afin d’aborder sereinement l’épreuve, le candidat doit adopter, le plus tôt possible, de bons réflexes. Voici les éléments qui sont susceptibles de lui faire gagner des points le jour J : –– structurer sa pensée et s’entraîner à dérouler un exposé à haute voix en anglais ; –– recourir à un vocabulaire adapté, mobiliser des mots-clés (qu’ils soient techniques ou non) et une grammaire correcte ; –– utiliser des mots de liaison à bon escient, éviter les répétitions et varier le vocabulaire ; –– montrer que le texte a bien été compris en le synthétisant correctement lors de la ­présentation ; –– proscrire toute paraphrase ; –– étayer ses arguments en s’appuyant sur le ou les documents, tout en portant un regard critique (analyse de la source et du point de vue, mise en avant des lacunes du texte ou des données manquantes) ; –– enrichir la présentation par des faits d’actualité et des éléments relevant de la culture générale, de la culture économique et de l’expérience professionnelle du candidat.

Une épreuve à démystifier Les épreuves orales, notamment en langue étrangère, sont souvent la bête noire des candidats. En effet, ceux-ci sont généralement mal à l’aise à l’idée de s’exprimer dans une langue qui n’est pas la leur. Ils redoutent particulièrement les questions du jury. Or le jury ne cherche aucunement à piéger les candidats. Il a pour objectif d’évaluer leur niveau en instaurant un dialogue et en posant une série de questions. Ne pas savoir

6 Avant-propos répondre à une question n’est pas forcément rédhibitoire. Au contraire, une relance ou une question qui peut paraître anecdotique doit être saisie comme une occasion de compléter les propos ou de revenir sur une ambiguïté qui demeurerait à l’issue de la présentation. Cet ouvrage, véritable « boîte à outils » du candidat, vise avant toute chose à démysti- fier l’épreuve. Libre au lecteur de s’approprier les fiches, de les détacher ou de les insérer entre deux pages de cours ou dans un manuel, d’en mémoriser le vocabulaire ou de s’y replonger à l’occasion de la lecture d’un article ou de l’écoute d’une vidéo, d’un repor- tage ou d’un podcast. Varier les supports, les points de vue et les sources constitue un véritable « plus » et conférera au candidat un accent plus authentique.

Des fiches qui jouent sur deux tableaux : les thèmes et la méthodologie Outre le vocabulaire dédié aux thématiques du programme, les fiches thématiques en langue anglaise proposent systématiquement des définitions à connaître, des explica- tions grammaticales couvrant les notions indispensables et liées aux ressources sélec- tionnées (Grammar in context), ainsi que de nombreux points de grammaire de l’oral (Oral grammar), des tableaux et schémas de synthèse, tous les concepts et un grand nombre de dates à retenir, ainsi que des questions guidant l’analyse et la compréhension des documents. Chaque liste de vocabulaire est agrémentée de précisions phonétiques concernant la prononciation et l’accentuation des mots. Les auteurs s’appuient sur la grammaire énonciative pour l’ensemble du travail sur la langue. Rédigées en français, les fiches méthodologiques décryptent les attentes du jury et pro- diguent de précieux conseils d’organisation, de structuration et de gestion de l’épreuve. 100 % conformes au nouveau programme de l’UE 6 et aux dernières recommandations officielles, les fiches de révision vous offrent un aperçu clair et complet des connais- sances et compétences indispensables, grâce à 40 séquences autonomes mais complé- mentaires : –– 33 fiches rédigées en anglais (à l’exception des traductions des mots et collocations et des points de grammaire) déclinent les thèmes au programme ; –– 7 fiches méthodologiques appliquées à l’épreuve orale, rédigées en français, per- mettent de peaufiner la préparation et d’engager un véritable plan d’action. Le mot des auteurs Principes généraux et conseils La langue utilisée dans ce livre est l’anglais britannique, pour le cours, le lexique et la prononciation. Toutefois, quand une expression ou un acronyme est unique­ ment étatsunien, nous gardons l’orthographe américaine (Labor Management Reporting and ­Disclosure Act, par exemple), comme pour les documents ou cita- tions ­d’origine américaine. Le lexique intègre, autant que possible, les équivalences en anglais ­américain.

Avant-propos 7 Nous recommandons un travail d’acquisition des connaissances et le développement d’analyses personnelles, notamment à partir des rubriques « Names and concepts to know, look for and explain » qu’il vous appartient de mettre en relation avec le sujet. L’intention de ce livre est de vous proposer un très grand nombre de textes courts pour que vous puissiez vous sensibiliser aux problématiques essentielles du programme et réviser les fondamentaux de la grammaire et de la grammaire de l’oral en contexte. Nous pensons que le cheminement proposé vous donnera les moyens d’aborder des textes plus longs, de façon autonome, à l’examen. Concernant la terminologie dans les rubriques « Grammar in context », nous avons pris le parti d’utiliser la terminologie spécialisée quand nous avons estimé qu’elle pouvait aider les non-spécialistes à mieux comprendre le fonctionnement de la langue. La plu- part du temps, nous abandonnons la terminologie spécialisée pour nous concentrer sur le sens des structures étudiées. Plus qu’une simple liste de vocabulaire, la rubrique « Useful vocabulary » contient quan- tités de collocations pour vous permettre d’utiliser des combinaisons de mots justes. Nous avons indiqué la prononciation des mots susceptibles de poser problème aux étudiants francophones (consultez, si besoin, le tableau des symboles phonétiques en annexe). Quand elle est indiquée, l’accentuation suit le code suivant : la syllabe accen- tuée est toujours marquée en gras ; si le mot contient un accent secondaire (moins fort), alors la syllabe portant l’accent primaire (le plus fort) est soulignée pour la différencier.

Remerciements Nous exprimons notre gratitude à l’égard des linguistes qui ont inspiré une grande partie de la rédaction de cet ouvrage. Nous pensons en particulier à H. Adamczewski, D. Chartier, R. Huart, J.-R. Lapaire, P. Larreya, C. Rivière, W. Rotgé et J.C. Wells. Nous remercions également S. Wilson pour sa relecture attentive du manuscrit et pour sa disponibilité, L. Ganet-Mattei pour ses conseils judicieux et la pertinence de ses remarques concernant le management et M. Meidinger pour son aide dans le domaine comptable. Cécile Lienhard remercie aussi Daniel Charbonnier, inspecteur général de l’Éducation nationale (IGEN), pour la confiance qu’il lui a accordée en lui confiant le poste ­d’enseignement du DCG 12 au lycée Ozenne, lui offrant ainsi l’occasion d’approfondir ses compétences dans le domaine de l’anglais des affaires. Nadine Audabram remercie tout particulièrement Nicolas, pour son soutien sans faille et ses relectures avisées qui ont jalonné l’élaboration du présent ouvrage. Nos étudiants font aussi l’objet d’une pensée spéciale ; ce sont eux qui nous poussent à remettre sans cesse sur le métier notre ouvrage, pour faire passer les connaissances, les aider et les accompagner sur un véritable chemin de réussite. En nous interrogeant, ils nous permettent de nous améliorer aussi, et fortes de cette expérience et de ces échanges, nous pouvons prodiguer des conseils efficaces.

8 Avant-propos Partie A Thèmes au programme

DSCG6 A.1 Banking

Key words Banknotes • Bankruptcy • Central bank • Credit crunch • Interest rates • Legal tender • Leverage of credit • Loan • Microfinance • Monetarism • Rating agency

1 Key notions

A. Banks and financial institutions

The World Bank (WB) The world bank is an institution founded in 1944, initially to contribute to the reconstruction of Europe after WW2, under the International Bank for Reconstruction and Development (IBRD) thanks to the Bretton Wood Agreements. It now aims at reducing poverty in the world by using the leverage of credit. It grants loans and gives developmental assistance to middle-income and low-income countries. In exchange of the loan, it imposes reforms on the debtor countries influenced by the monetarist school of thought.

Definition Monetarism is a microeconomic theory that asserts that variations in money supply have a deep impact on the economy and should therefore be controlled by government to foster economic stability. It focuses on price stability and the fight against inflation as its main proponents – Milton Friedman and Anna Schwartz – asserted that the total amount of money in an economy is the primary determinant.

The world bank is composed of 189 member countries, but you first need to be part of the International Monetary Fund (IMF), another institution that shapes the global economy. To be part of the world bank you need to pay a subscription, in the form of shares. The president of the WB is the country with the strongest economy, so at the moment, the United States.

Central banks Central banks are the banks of each country (e.g. Norges Bank, Swiss National Bank), or federal banks, when there is a union of countries or states (the European Central Bank – ECB, the Federal Reserve – FED). They are in charge of setting the goals and lending rates of the areas they rule. They are independent national authorities that conduct monetary policies, regulate banks by, for example, setting interest rates (to limit inflation by raising them, or boosting spending by lowering them), a reserve requirement (the amount of cash member banks must have on hand each night) and opening market operations to buy and sell securities from member banks (so as to change the amount of cash on hand without changing the reserve requirement), and providing financial Banking 11 Fiche A.1 services. Central banks issue money. Its goals nowadays are to stabilise the nations’ currencies, to keep unemployment low and to prevent inflation. It is governed by a board consisting of representatives from its member banks.

Look for yourself: www.federalreserve.gov

The most well-known central bank is the ECB (European Central Bank) which is the bank administering the monetary policies of the 19 countries that adopted the Euro currency, and thus form the Eurozone. Its current president is Christine Lagarde. The main target set by its status is to maintain price stability within the Eurozone. Its main missions are: –– to set and carry out the monetary policy of the Eurozone –– to carry out foreign exchange operations –– to monitor the foreign reserves of the European system of central banks and financial markets The ECB is also responsible for issuing Euro banknotes and is the sole bank entitled to do so. Though it is one of the seven institutions of the EU, it has a corporate structure, with a stock capital and shareholders ( fiche A.4).

Look for yourself: www.ecb.europa.eu

Member banks The member banks are divided into two categories: •• Investment banks: an investment bank is a financial company or branch of a firm that specialises in advising and undertaking financial transactions on behalf of individuals, corporations, and governments. In those situations, the bank acts as the client thanks to a will of probate to issue securities and to raise financial capital, or for mergers and acquisitions (M&A), for market trading of financial instruments such as derivatives, bonds or securities. It is usually considered that the market is divided into three main branches: the upper tier, usually called the Bulge Bracket, so called as a wallet full of money ‘bulges’ into a round shape, an intermediary market called the middle market, where mid-level businesses exchange, and a market for specialised businesses that is called the ‘boutique market’. •• Commercial banks: commercial banks are the corporations where everyday people open bank accounts to deposit their income and money, withdraw money when they need, and ask for loans.

12 Banking Fiche A.1

Links between commercial and central banks

Banks respond Commercial banks to requests for risky Set lending rate to maximise loans from borrowers, profits giventhe policy rate loan demand depends and the perceived riskiness on lending rate of the loan Banks put money on Banks borrow reserve at the money from the central bank Borrowers money market

Savers put Central bank sets Central bank deposits Money Sets policy rate in banks market the interest rate in the to achieve Private sector money desired private market sector spending Savers lend money in money market by buying government bonds Savers

B. Money supply What is money? Anything that performs the three functions of money: medium of exchange, store of value and unit of account. What are the four main types of money? Commodity money, fiat money, fiduciary money, and commercial bank money.

Commodity money Closely related to a barter system, where goods and services are exchanged, initially, the goods themselves became money, but they had to be a medium that was easy to exchange such as gold coins, shell, beads or spices.

Fiat money Fiat money is the money that gets its value from an authority (government, i.e. a fiat) that declares it is the legal money and must be accepted as the legal means (or legal tender) of payment in the area in the amount declared. It is not backed by any physical commodity and its intrinsic value is significantly lower than its face value. The value is derived from the relationship between supply and demand. Most modern countries have a fiat money system economy, i.e. paper currencies such as the US dollar are fiat currencies.

Fiduciary money Fiduciary money is based on confidence, such as cheques, banknotes and drafts. It has no legal value guaranteed by the local authorities. The issuer of fiduciary money promises

Banking 13 Fiche A.1 to exchange it for the amount of fiat money or commodity inscribed on it. As long as people are confident that this promise will be kept, it can be used as fiat money.

Commercial bank money Commercial bank money is created through fractional reserve banking, the process through which commercial banks give loans for more money than they actually hold. It is debt generated by banks so people can exchange them for fiat money or commodities. The bank system initially served to keep commodity money safe, to mint or coin money for fiat money and now, banks are money creators, thanks to the granting of loans.

A short history of money (adapted from the “Goldsmith’s Tale”) Initially humans owned goods and livestock, and wealth was evaluated by those goods. But to travel, people needed a representation of their wealth that was easy to carry, and valuable enough so that it could be easily exchanged. Cocoa beans, seashells and even feathers, were used as precursors to money, depending on the culture and the continent. Precious metals, such as copper, silver and gold soon became widely used in exchange for goods, as they were rare, but not excessively so. They were also easy to work into all kinds of shapes to store them easily. Goldsmiths specialised in casting coins in more standardised forms. To protect the coins, goldsmiths built vaults that were guarded. In exchange for a fee, clients asked them to keep their own coins and valuables in their vaults to protect them. Soon, the vaults held more gold from outside deposits than from what the goldsmith had coined. Goldsmiths also shrewdly noticed that they rarely saw their customers. The latter left the money in the vault and used the claim-cheques goldsmiths had given as a receipt to trade for goods on the market, since paper money was far more convenient than heavy gold and coins. Goldsmiths also realised they could lend money to people using that paper money, which over time lead to the development of the banking system. With the expansion of trade in the 17th and 18th centuries, more and more businesses needed to borrow money. The goldsmiths had then become bankers. They would lend not only their money but also their customers’ money, without telling them. Since customers did not withdraw their money from the vault frequently, and in any case not at the same time, they would not know as long as the loan was repaid. At times, however, people became suspicious and demanded an account, threatening to withdraw all their gold at once. That occurred in the Spanish crisis in 1557 and everybody lost from it, as the moneylenders and goldsmiths had to declare themselves bankrupt. Paper money lost its value and the depositors lost their gold as there was not enough money to refund everyone. To reassure them the goldsmiths offered to give them a share of the profits, or interest, in exchange for their deposit. The moneylenders would lend the money to people who needed to borrow at a higher interest so as to cover their fees, work, and risk. This led to the modern banking system, based on credit, with fractional reserve banking. In England,

14 Banking Fiche A.1

the system became official in 1695 with the Bank of England issuing permanent banknotes, thus replacing gold and silver for important transactions. With transatlantic trade and the Industrial Revolution, there was an increased demand for loans, and not enough money deposited in banks. Little by little bankers realised they did not need to have the actual gold equivalent in their safes to issue loans, as long as they had enough money to refund those who asked at the moment they asked. They could lend more than they actually had, and it would benefit the whole economy, since it would make trade easier. So, banks were not only intermediaries but started creating money, commercial bank money, which is the basis of our current system.

C. The subprime crisis and the credit crunch In the aftermath of September 11th 2001, the Federal Reserve attempted to stimulate the economy by cutting interest rates to historically low levels while building firms were helped by the states’ governments. The housing boom of the mid-2000s combined with low-interest rates prompted many banks to offer loans with adjustable interest rates to households with limited disposable income. It produced a real estate bubble that was doomed to burst. But lenders were not selective, they offered NINJA loans: no income, no job, no assets – no problem. That meant households that would not normally have qualified for loans were granted them at a subprime rate (above the usual prime rate since they could not qualify for prime rate). Investment banks and firms were quite willing to buy these loans and repackage them as mortgage backed securities (MBSs) and collateralised debt obligations (CDOs). Many institutions and banks worldwide bought those securities and obligations, since as long as borrowers refunded their mortgages, as the subprimes were high, they gave very good returns. But as the ration of household debt to disposable personal income rose with those loans to 77% (in France we recommend no higher than 33%) and up to 127% by 2007 because of the increase of the adjustable interest rates, when the housing bubble burst, many households could not pay their mortgage, hence mortgage delinquencies (or mortgage default). As many banks worldwide had bought MBSs and CDOs, the payment deficiency impacted everybody and triggered a major recession as well as the bankruptcy of major investment banks such as Lehman Brothers. To limit the fallout, many governments had to bailout banks by purchasing their debts to save the banking system which was on the verge of collapsing.

The credit crunch In the aftermath, the rating agencies (agencies checking the credit score of borrowers: whether or not they are likely to refund the loan) set much stricter criteria, and banks asked for more security to lend money, thus drastically limiting access to credit at the moment when economy was bad, so businesses needed money to survive. As it became more difficult to raise fund or borrow money, the economy slowed down making access to credit even more difficult, hence the name credit“ crunch”.

Banking 15 Fiche A.1

Microfinance Definition Microfinance is the set of financial services that are used to reduce poverty, by offering banking services to people normally excluded from mainstream banking institutions, such as unemployed or low-income individuals, or groups that could not otherwise have access to financial services, like people in developing countries.

The most common service is micro-credit or micro-loan, ranging from $100 to $25,000 so as to give impoverished people the means to become self-sufficient. Microfinance institutions also offer specific services such as low-cost current and savings accounts, and micro-insurance to protect poor people and businesses in areas not usually covered by insurance because they are too at risk from the danger of losing everything.

D. Names and concepts to know, look for and explain

•• Names to remember: the Medici, A. Smith, J. Law, M. Friedman, P. Krugman, K. Marx, J.M. Keynes and J. Galbraith, I. Fisher, the Rothschild family, J.P. Morgan, Goldman Sachs, Lehman Brothers, the Bretton Woods Agreement •• Concepts to remember: Bretton Woods system, gold standard, International Monetary Fund and World Bank, rating agencies, disposable income, household debt, three functions of money, four types of money, three types of banks, mortgage-backed securities (MBSs) and collateralised debt obligations (CDOs)

2 Key dates •• For centuries, temples kept commodity money under the form of goods, livestock or jewellery as well as fiat money when created, safe for members of their communities •• 1397: creation of the first official bank in Florence: the Medici Bank, operated for nearly a century •• 1542: the Great Debasement: King Henry VIII and Edward VI operated a policy of coin debasement during their reigns, to gain commercial edge •• 1553: the Company of Merchant Adventurers to New Lands, the first joint-stock company to receive its charter •• 1656: Sweden issued the first European banknotes, initially for private clients until it became a public institution in 1668 •• 1694: foundation of the Bank of England •• 1695: the Bank of Scotland was created by the then independent Scottish Parliament •• 1716: the soon to be infamous Banque Générale was opened by John Law in France •• 1782: creation of the Bank of North America •• 1791: the US Congress granted a 20-year charter to the First Bank of the United States

16 Banking Fiche A.1

•• 1800: the Rothschild family laid the foundation of what would become the European- wide banking system •• 1817: New York Stock Exchange Board •• 1825: bank panic and failure of UK banks •• 1862: the federal government issued “legal tender”, paper money to finance the Civil War. As they were printed on green paper, they were called greenbacks •• 1874: Specie Payment Resumption Act: redemption in gold of greenback paper •• 1913: creation of the Federal Reserve system by the Federal Reserve Act: beginning of the US central banking system, legal authority to issue legal tender •• 1929: October 29th, Black Tuesday: Wall Street or stock market crash. It triggered the fall of many other stock markets worldwide, the closing of 10,000 banks and the beginning of the Great Depression •• 1933: end of convertibility of US dollars into gold •• 1944: Bretton Woods Agreements Creation of the International Monetary Fund •• 1944 to 1971: spreading of monetary theories worldwide through the work of the IMF •• 1971: Nixon shock put an end to the gold standard and the Bretton Woods system •• 2000: housing bubble in the USA and subprime lending at adjustable rate •• 2002: Sarbanes-Oxley Act (SOX) •• 2006: housing bubble burst, triggering mortgage delinquencies, foreclosures •• 2007: subprime crisis (also called late 2000s financial crisis) followed by the Credit Crunch / failure of major banks worldwide •• 2008: stock market crash due to the investment in mortgage backed securities

3 Hot off the press The European Union has bigger problems to deal with than Brexit Three separate events last week highlighted months of the year, unchanged on the last the extent of the economic challenges Europe three months of 2018. faces. Firstly, the latest health check on the There was a brief period when heavy doses eurozone economy showed that growth of stimulus from the European Central Bank remains chronically weak. Italy is suffering (ECB) lifted the eurozone’s growth rate. from its fifth recession in two decades, while But the impact of zero interest rates and the Germany’s export-dominated economy is being hit hard by the slowdown in the global money-creation process known as quantitative economy. Germany escaped recession only by easing (QE) has now worn off. A real solution the skin of its teeth in the second half of 2018 to Europe’s growth problems means fixing the and early 2019 has seen little improvement. design flaws1 in monetary union, something The eurozone as a whole appears to be on that has been glaringly obvious2 since the course to grow by 0.2% in the first three financial crisis of a decade ago. L. Elliott, The Guardian, March 24, 2019 1. Les défauts de conception. 2. D’une évidence aveuglante.

Banking 17 Fiche A.1

A. Check your understanding 1. What is going on in Europe? 2. How does the author account for the situation? 3. Do you agree? Do you disagree? Can you think of any other reason which could explain the situation?

B. Grammar in context – Les temps, les aspects et les marqueurs temporels associés Le texte ci-avant permet de réviser les temps et aspects qu’il est indispensable de maîtriser pour décrypter et analyser finement les textes.

Nom Valeur générale Exemples tirés du texte

Présent simple Faits présents, ––the economic challenges Europe faces généralités ––growth remains chronically weak ––The Eurozone as a whole appears to be… ––A real solution […] means… Temps Prétérit simple Faits passés sans lien ––Three separate events […] highlighted avec le présent the extent of the economic challenges. ––The […] health check […] showed… ––Germany escaped recession Présent Description ––Italy is suffering BE + V–ING d’un processus ––Germany’s export dominated economy is being hit hard (voix passive)

Aspects Present perfect Bilan présent ––early 2019 has seen little improvement d’une action passée ––but the impact […] has […] worn off Situation passée ––something that has been glaringly qui continue obvious dans le présent

NB : ce tableau n’est pas exhaustif. Les autres temps et aspects, ainsi que la voix passive, seront étudiés dans les fiches suivantes : le prétérit BE + V–ING ( fiche A.6), le past perfect ou pluperfect ( fiche A.11), et la voix passive ( fiche A.6).

C. Practise your grammar 1. Repérez, dans le texte, les marqueurs temporels associés aux formes verbales. 2. À l’aide des informations du tableau, construisez une frise chronologique des éléments relatés dans l’article. Distinguez les faits et les commentaires. Ce travail de représentation graphique et de réorganisation des événements est une technique permettant d’analyser efficacement un texte.

Les formes verbales associées à des marqueurs temporels précis tissent un réseau textuel qui indique la chronologie du texte. Le travail du lecteur consiste à mener une enquête qui aboutit à une meilleure compréhension du texte.

18 Banking Fiche A.1

▸▸Useful vocabulary Nouns and noun phrases stocks les actions Banks and financial institutions the US Federal Reserve la banque centrale an alternative un investissement Bank (the FED) américaine investment alternatif thrift l’épargne bonds les obligations Money supply a bricks and mortar un emplacement barter le troc location physique bitcoin [ˈbɪtˌkɔɪn] le bitcoin a brokerage firm un cabinet de courtage cash de l’argent liquide a central bank une banque centrale a cheque account un compte chèque / a commercial bank une banque commerciale (UK) / a current un compte courant credit institutions des organismes de crédit / account (UK) / des instituts de crédit checking account (US) a credit union une coopérative de crédit a coin une pièce de monnaie a depository une institution de dépôt a cryptocurrency une cryptomonnaie institution [dɪˈpɒzɪtrɪ] a currency [ʌ] une devise exchange-traded des fonds négociés financial assets des actifs / avoirs financiers funds (ETFs) en Bourse liquid instruments les instruments liquides a financial institution une institution financière a macroeconomic une politique [faɪˈnænʃl] policy macroéconomique an individual investor un investisseur individuel macroeconomy la macroéconomie [ ] ˌɪndɪˈvɪʤuəl near money les biens semi-liquides an institutional un investisseur [ˈnɪə ˈmʌni] investor institutionnel a saving account / un compte-épargne an insurance company une société d’assurances a savings account an internet bank / une banque en ligne the balance le solde (d’un compte an online bank [ˈbæləns] en banque) an investment bank une banque d’affaires quantitative easing l’assouplissement an investment une société de placement quantitatif company The subprime crisis and the credit crunch investment vehicles des instruments a bailout un sauvetage financier [ ] de placement ˈvɪəkl bankruptcy la faillite a mortgage company une société de prêt a credit score une cote de solvabilité [ˈmɔːgɪʤ] hypothécaire the credit squeeze / le resserrement du crédit mutual funds les fonds communs crisis de placement a dearth of capital une pénurie de capital a mutual fund une société de fonds company commun de placement a decline une baisse / une chute / un déclin non-depository les institutions non institutions bancaires a financial crisis une crise financière / [ ] two financial deux crises financières an online platform une plateforme Web sɪs / crises [siːz] oversight la supervision / a foreclosure une saisie la surveillance a hedge fund un fonds spéculatif / a retail bank une banque de détail de couverture a savings and loan une association household debt [ ] l’endettement des ménages association (S&L) d’épargne et de crédit det the securities market le marché des titres a housing bubble une bulle immobilière Banking 19 Fiche A.1

an interest rate un taux d’intérêt Verbs and verb collocations a lender un prêteur / un créancier to access credit accéder au crédit a lending institution un établissement de crédit / to afford se permettre un organisme prêteur (une dépense) a loan [ləʊn] un prêt / un crédit to bailout a bank sauver une banque mortgage la défaillance sur les prêts to borrow emprunter delinquency hypothécaires to circulate circuler / faire circuler the mortgage industry le secteur hypothécaire to collapse s’effondrer a recession une récession / une crise to conduct a conduire une politique residential investment l’investissement résidentiel monetary policy monétaire a ripple effect un effet domino to cut back réduire shortage (of funds) un manque / une pénurie to decline baisser / diminuer [ˈʃɔːtɪʤ] (de fonds) to default [dɪˈfɔːlt] ne pas payer the subprime la crise des subprimes ses échéances mortgage crisis to drop baisser / chuter Microfinance to hold détenir exorbitant interest des taux d’intérêt to lend prêter rates [ɪgˈzɔːbɪtǝnt] exorbitants to mint money / to battre la monnaie fixed repayment des échéances coin money terms de remboursement fixes to place trades placer des transactions (higher) interest rates des taux d’intérêt (plus élevés) to pool funds mettre des fonds en commun a loan shark un usurier to raise capital [ ] lever des capitaux [ˈləʊnˌʃɑːk] æ low-income areas des zones à faibles revenus to rise monter / augmenter the rural population la population rurale to scale back réduire ses activités operations without collateral sans caution / sans to take deposits [ ] accepter des dépôts [kəˈlætrǝl] garantie ɒ Acronyms and abbreviations BoC Bank of Canada La Banque du Canada est la banque centrale du Canada. BoE Bank of England La Banque d’Angleterre est la banque centrale du Royaume-Uni. BoJ Bank of Japan La Banque du Japon est la banque centrale du Japon. CDO collateralised debt obligation titre de créance collatéralisé EBRD European Bank for BERD Banque européenne pour la reconstruction Reconstruction and et le développement Development ECB European Central Bank BCE Banque centrale européenne EMS European Monetary System SME Système monétaire européen EMU European Monetary Union UME Union monétaire européenne ETF exchange-traded fund FNB Fonds négocié en Bourse

20 Banking Fiche A.1

Acronyms and abbreviations the FED Federal Reserve System La réserve fédérale est la banque centrale des États-Unis d’Amérique. FDI foreign direct investment IDE investissement direct à l’étranger IBRD International Bank BIRD Banque internationale pour la reconstruction for Reconstruction et le développement and Development IMF International Monetary Fund FMI Fonds monétaire international LDCs Least Developed Countries PMA pays les moins avancés MBS Mortgage-backed security titre adossé à des créances hypothécaires NB Norges Bank La Norges Bank est la banque centrale de Norvège. NGO non-governmental ONG organisation non gouvernementale organisation PBC / People’s Bank of China BPC La Banque populaire de Chine est la banque PBOC centrale de la République populaire de Chine. QE quantitative easing assouplissement quantitatif SNB Swiss National Bank BNS Banque nationale suisse WB the World Bank BM Banque mondiale

Attention, please: economic (en rapport avec l’économie) ≠ economical (qui fait faire des économies)

TO GO FURTHER • Lehman Brothers collapse: What went wrong ten years ago?

• The History of the European Central Bank http://dunod.link/cdpqdty

http://dunod.link/h026xhn • What Is the Quantity Theory of Money?

http://dunod.link/ghxvw2v

Banking 21

DSCG6 A.2 Venture capital and business plans

Key words Business plan • Unicorn • Venture capital • Working capital

1 Key notions A. Working capital To set up and to keep a company or a business afloat, it is paramount to raise cash and have a steady input of working capital. Definition Working capital is money which is available for immediate use, rather than money which is invested in land or equipment.

Creating a business and maintaining it requires an initial investment – the initial capital composed of personal assets, which is part of the equity of a business, and very often loans (debt) – as well as regular investment. This enables you to keep your business running while waiting for your customers to pay their invoices. Large companies often expect a delay of up to 60 days to pay after receipt of an invoice. So, you need to evaluate your cash flow to be able to run your business: pay wages, lease items, prospect for sales while waiting for payment. The way you manage your cash flow is an important factor in whether or not you will be able to attract investors, as it sends a strong signal about your management skills. Types of debts and equity to finance a business

Equity Debt ••Seed finance ••Loan ••Angel finance ••Overdraft ••Crowdfunding ••Bond ••Venture capital ••Peer-to-peer lending ••Private equity ••Asset-based finance ••IPO ••Factoring and invoice discounting

Businesses decide on what type of financing to use depending on the level of development of the company, their assets, and their prospects of growth. To raise money, companies have several options depending on the nature of their business, and whether it is for initial capital or to refinance the business. It is very important to remember that there are two sides to the financing of companies: –– the point of view of the business or the institution offering the financial instrument to raise capital –– the point of view of the investor who uses those financial instruments to get the best return on investment depending on the level of risk they are ready to take Venture capital and business plans 23 Fiche A.2

All the types of equity and debts listed above are extremely useful for countries and businesses to raise money. They are tools to make people with capital work with people who have ideas: without that collaboration, most companies would not exist. Yet, if you are skilled, it becomes possible to make money without taking any interest in the start-ups, and companies issuing bonds or derivatives. That explains why investment has sometimes become purely speculative.

B. Venture capital and unicorns Definition Venture capital (also known as “VC”) is a particular form of start-up capital.

Venture capital enables investors (known as venture capitalists) to provide financing to start-up companies that are thought to have long-term growth potential. In addition to its monetary form, VC can be provided in the form of managerial or technical expertise. Despite VC being a risky investment, its potential for above-average returns is an attractive payoff. From the start-up companies’ perspective, venture capital funding is an increasingly popular way of financing their operations. Companies with a limited operating history often have a hard time getting funding from traditional financing sources such as banks, in the form of loans, for instance. The main drawback of relying on VC for their development is that start-up companies have to give equity in the company to the investor, and consequently, a say in company decisions. Venture capital companies specialise in financing businesses in order to make money for their own companies. They are rarely interested in the intricacies of the businesses they invest in. They invest in the share capital so as to make a profit, and they usually intend to sell their shares once the value of the business they invested in has increased. That situation can be mutually beneficial: the business needs capital to develop, and loans can be difficult to obtain, venture capital companies take risks by investing in small companies or start-ups to which traditional financial institutions are reluctant to grant loans.

A short history of venture capital (VC) Some consider that a primitive form of venture capitalism dates back to maritime expeditions such as Columbus’s voyages in the 15th century. Before World War II, VC was the domain of wealthy families such as the Vanderbilts or the Rockefellers, but it is only after the Second World War that venture capital developed as an industry. The creation of the ARDC in 1946 is a major step in the history of VC. During the 1960s and 1970s, VC mainly focused on technology companies. From the 1980s onwards, VC is characterised by a series of boom and bust cycles. The 1980s are known for the leverage buy-out boom.

24 Venture capital and business plans Fiche A.2

In the 1990s and 2000s, with the internet Boom, many venture capitalists, called business angels (or angel investors), decided to invest in start-ups – young innovative companies that are believed to have an important development potential – often specialised in internet business. Some encountered major success such as Lyft, Paypal, or lastminute.com, but many of them had difficulties and did not last long. Nowadays, start-ups offer innovative products and services in the digital field, biotech, cleantech and healthTech but they can develop in other fields as long as the potential for growth is deemed important. In the 1990s, with the advent of the internet, the tech bubble (also known as the dotcom bubble or the internet bubble) started growing. It eventually burst in the early 2000s.

In VC, unicorns are not mythical animals walking on four legs! Coined by venture capitalist Aileen Lee in 2013, the term refers to privately held companies valued at over $1 billion dollars ($1,000,000,000). As of January 2020, SpaceX, AirBnB and Epic Games were among the top-ranking unicorns worldwide.

C. Building a business plan To evaluate their potential, start-ups draft a business plan that will outline the potential of growth of the product and the strength and soundness of the project in terms of finance, business strategy, and management. It is important to present several options, so as to show the potential variations and their consequences have been examined. The elements required will differ depending on the target audience and the type of business, but most plans must include: –– the financial forecast –– the cash flow forecast –– the last three years financial balance and the company bank records if it exists –– the organisation chart with the member of staff, their function and responsibilities in the project (with their CVs if available) –– an executive summary –– the investment and equipment needed –– the expected date of benefits –– how benefits will be shared between investors, debt return and development (labour force and equipment investment)

D. Names and concepts to know, look for and explain

•• Names to remember: J.P. Morgan, Peter Thiel, Airbnb alumni, McKinsey, Ivy League Club, Georges Doriot (risk and return) •• Concepts to remember: first line investors and backers, boom and bust, dotcom bubble, Great Recession, public and private markets, hedge fund, business angel (investing in the idea of a company / early stage), portfolio construction, bulge bracket banks

Venture capital and business plans 25 Fiche A.2

2 Key dates •• 1901: US Steel company (J.P. Morgan invested in Carnegie’s steel company and later conducted the first major buyout to create what was to become US Steel) •• 1958: Small Business Investment Act •• 1990s: dotcom bubble •• 2000s: Great Recession

3 Hot off the press 11 US cities poised to be the next hot spot for start-ups—and what people earn there The most promising city for new start-ups Francisco and New York receive nearly may be known more for its dairy industry half of all venture capital investment in the than its small business scene, but its educated country, a high cost of living makes it hard workforce, low cost of living and history of for entrepreneurs to start businesses there, recent venture capital deals make it an ideal and workers can be stretched thin even on six- place for entrepreneurs to strike out on their own. figure salaries. Even smaller start-up scenes Madison, Wisconsin, was named the top city that have cropped up in response, like Austin, with start-up potential, according to a new Texas, have seen real-estate prices skyrocket report from Fundera. The analysis looked thanks to an influx of newcomers. at mid-sized cities with fewer than 500,000 As a result, workers are moving beyond city residents, with the best combination of a large limits. A 2018 Gallup poll found a greater educated workforce and affordability in order share of Americans would prefer to live for a small business to thrive. in a small city or a suburb, over a big city. Millennials especially are now fleeing big Plano, Texas, ranked second, while St. Paul, cities for greener, and more affordable, Minnesota, rounded out the top three. pastures. There’s reason for founders to look to smaller cities for their latest ventures. While San J. Liu, www.cnbc.com, October 23, 2019

A. Reading tips – A few general pieces of advice Rephrasing the contents of a text is an excellent way of showing that you have understood the text and that you have grasped its meaning. Identifying proper nouns and making sure you understand what they refer to is also a good technique to discover the document. Knowing a few idiomatic expressions can help you understand press articles as it is quite usual for journalists to use them. Idiomatic expressions can be tricky to understand for two main reasons. First, they have a particular meaning that is different from the meanings of each word understood on its own. Second, most of the time, they do not have a word to word equivalent translation in other languages, e.g.: to be caught red- handed (être pris(e) la main dans le sac).

26 Venture capital and business plans Fiche A.2

B. Check your understanding 1. What is the text about? 2. Pick out the proper nouns in the text. What do they refer to? 3. On a map, locate the different geographical elements mentioned. 4. What trend does the article describe? 5. With the help of your personal knowledge, explain how start-ups and VC are related to this trend. 6. Rephrase the main ideas contained in the text in your own words.

C. Get ready for the exam List the pros and cons of each situation and give your personal informed opinion.

For an efficient preparation, you should get used to writing down notes rather than full sentences. Speaking from your notes will help you sound more natural and convincing. We strongly advise you against reading a fully-written text. And do not forget: practice makes perfect!

D. Grammar in context – Le comparatif et le superlatif Le texte propose une comparaison entre différentes villes des États-Unis d’Amérique sur la base de leurs qualités/caractéristiques. La journaliste fait appel à deux outils grammaticaux pour comparer les villes entre elles : le comparatif de supériorité et le superlatif. Regardons d’un peu plus près la construction et le sens de ces différents outils : •• Le comparatif permet de comparer un élément ou un groupe d’éléments à un autre élément ou groupe d’éléments et d’affirmer que l’un d’entre eux est supérieur (ou inférieur, ou égal) aux autres. Les autres éléments peuvent être clairement identifiés ou bien sous-entendus. •• Le superlatif permet d’évoquer un record. L’élément concerné par le superlatif présente des caractéristiques uniques ou qui dépassent les caractéristiques de tous les autres éléments.

Construction Les tableaux ci-dessous ne traitent que des adjectifs (issus du texte, pour la plupart). •• Le comparatif de supériorité et d’infériorité

Type d’adjectif Adjectif Comparatif de supériorité Comparatif d’infériorité

long promising more promising than less promising than affordable more affordable than less affordable than recent more recent than less recent than ideal more ideal than less ideal than

Venture capital and business plans 27 Fiche A.2

Type d’adjectif Adjectif Comparatif de supériorité Comparatif d’infériorité

court low lower than less low than large larger than less large than late later than less late than green greener than less green than great greater than less great than small smaller than less small than high higher than less high than hard harder than less hard than big bigger than less big than

irrégulier good, well better than less good than bad, ill worse than less bad than far farther than / further than less far than

•• Le comparatif d’égalité et d’inégalité (as…as ou not as…as : un bon outil pour exprimer une différence de façon indirecte)

Type d’adjectif Adjectif Comparatif d’égalité Comparatif d’inégalité

long promising as promising as not as promising as affordable as affordable as not as affordable as recent as recent as not as recent as ideal as ideal as not as ideal as

court low as low as not as low as large as large as not as large as late as late as not as late as green as green as not as green as small as small as not as small as

irrégulier good, well as good as, as well as not as good as, not as well as bad, ill as bad as, as ill as not as bad as, not as ill as far as far as not as far as

•• Le superlatif de supériorité et d’infériorité

Type d’adjectif Adjectif Superlatif de supériorité Superlatif d’infériorité

long promising the most promising the least promising affordable the most affordable the least affordable recent the most recent the least recent ideal the most ideal the least ideal

28 Venture capital and business plans