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Portfolio
Third Unit
Third Unit Third Unit
Mariajose Santizo
5 ACCT
Key No.
14
2
Commercial………………………………………………………………...1
Credit Letters…………………………………………………………2
Applications…………………………………………………...3
Credit Inquiry………………………………………………….4
Credit Response……………………………………………...5
Credit-Granting Letter………………………………….……6
Credit Refusing…………….………………………………….7
Collection Letters……………………………………………………8
Step 1…………………………………………………………...9
Step 2…………………………………………………………...9
Step 3………………………………………………………….10
Step 4………………………………………………………….10
In-house Correspondence.………………………………………11
Memorandum……………………………………………….11
Minutes………………………………………………………..13
Glossary……………………………………………………………...15
Marketing…………………………………………………………………..20
Bonds………………………………………………………………...21
Stocks and Shares…………………………………………………22
Takeovers……………………………………………………………23
Glossary……………………………………………………………...25
Partial Test………………………………………………………………….34
Reflective Essay…………………………………………………………...36
Opening the Doors to the Business World……………………37
Index
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Commercial
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Credit
Letters Credit involves purchasing and receiving goods
without immediate payment. Credit transactions are
common and essential in business. There are five types
of credit correspondence:
• Application for credit
• Inquiries about credit worthiness
• Responses about credit worthiness
• Letters granting credit
• Letters refusing credit
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Applications Customer applications for charge accounts are usually made by
filling out application forms, but business account applications are
usually made letter. A letter of this kind should include credit
references.
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Credit Inquiry Credit bureaus keep files on people and businesses whose credit
references and histories they have investigated. When they
determinate an applicant’s credit standing they give the
applicant a credit rating. Based on this rating they decide
whether or not to grant the applicant credit.
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Credit Responses It’s important for companies to control the information given out
and to limit the information to verifiable facts such as the amount
owed, the maximum credit allowed and the degree of
promptness in payment.
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Credit-Granting Letters
When all credit references are favorable a letter is sent to the
customer to notify him that the credit has been approved. This
letter should:
o Welcome the customer
o Explain credit terms
o Establish goodwill
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Credit-Refusing Letter The reason for which a company is denying a credit application
may be expressed vaguely, trying to encourage business on cash
basis. The tone must be positive and you-oriented. Suggest that
the customer reapply for the future.
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Collection
Letters The main purpose of writing this letter is to get the
money owed and maintain goodwill. It should be firm
rather than demanding. They should be you-oriented,
courteous, considerate and concerned about the
customer’s best interest. The first letter is the mildest
and most understanding, while the final letter in a
series threatens to turn the matter to a lawyer. This
letter should contain:
o The amount owed
o How long the bill is overdue
o Specific action the customer may take
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Step 1 The monthly statement reminds the customer of outstanding bills,
if it is ignored and a week has passed, the company may send a
second statement, stating “past due”.
Step 2 The second collection letter should still be friendly. It should seek
to excuse the unpaid bill as an oversight. Stress on future sales,
rather than on payment.
Our records indicate that the balance of $_______ on your
account is now past due. Payment is requested.
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Step 3 This letter is still friendly but also firm. Expressing confidence in the
customer’s intention to pay, asking the customer the reason for
the delay. It should make an appeal to the customer’s sense of:
o Fairness
o Cooperation
o Obligation
Step 4 A threat of legal action is sometimes all that will motivate a
customer to pay. In this letter the company gives the customer
one last chance to pay before steps are taken.
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Memorandum Memos are used to prevent future misunderstandings memos
provide a simplified, standardized format for communicating
information concisely. The tone of memos tends to be more
informal than the tone on a business letters, however it’s important
to maintain a courteous tone. It is not prepared on company
letterhead, nor does it include an inside address, salutation and
complimentary closing.
In-Hose Correspondence Business people frequently communicate in writing with
employees of their own company. The main purpose of
this letter is to share information.
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Minutes Some meetings are held at fixed intervals, while others are called
for special reasons. Minutes are a written record of everything
that transpires at a meeting. A secretary takes notes during the
proceedings and later on prepares a draft that includes all the
pertinent information. The minutes of the formal meetings are
made verbatim, meaning they include word for word of
everything that is said or done. They should include the following
facts:
The name of the organization
Place, date and time of the meeting
Whether or not the meeting is regular
Name of the person presiding
Record of attendance
Reference to the minutes of previous meetings
Account of all reports and motions made
Date, time and place of the next meeting
Time of adjournment
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Glossary
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Adequate Sufficient, enough
o When cooking it’s important to use
adequate ingredients.
Confidential Secret, private
o All information received must be kept
confidential.
Discreet Showing good judgment, prudent
o Commercial letters should not only
generate good will but they should
also be discreet.
Libel Giving an unjustly unfavorable
impression of a person or thing.
o When responding to a letter, the
information provided shouldn’t be
libel. 16
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Outstanding Unpaid
o Mr. Michaels has an outstanding bill
to cover
Rebate Discount, return of part of payment
o The company made him a rebate
because he has always been an
incredible client.
Accessible Understandable
o Information contained in minutes
must be accessible to all employees.
Agenda List, schedule
o It’s important for minutes to include
the date of the next meeting so that
the employee takes note of it in their
agenda. 17
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Preside To act as a chairperson, to lead
o Mr. Williams was presiding last
month’s meeting.
Pertinent Relevant
o It’s important to include only
pertinent information in those kind of
documents.
Motion Proposal
o Many motions were discussed during
last week’s meeting.
Dispense To give out
o Fliers were dispersed throughout the
city.
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Transpire To take place, to happen
o The next meeting will transpire in the
employees’ cafeteria.
Verbatim In the same words
o During a formal meeting secretaries
usually take verbatim notes.
Resolution Statement of a decision or opinion
o We presented the resolution to Mrs.
Jacobs yesterday.
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Marketing
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Bonds Companies might generate cash flow by issuing bonds.
They usually use investment banks to issue them and
find buyers. Bondholders get their original investment
on a fixed maturity date, and they receive interest
payments at regular intervals until then. Bonds are
generally safer that shares because even if the
company goes bankrupt it has to pay you back. Bond
interest is tax deductible. Treasury bonds have a
maturity date of two to ten years while treasury bonds
have maturity of ten to 30 years. Bonds can be traded
on the secondary bond market. They quote bids and
offer prices for bonds with very little difference between
them. When you hear the term “yield” of a bond, it is
how much income it gives.
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Stocks &
Shares Companies might also generate cash flow by selling
shares. They are certificates that represent part
ownership of the company. Selling stocks for the very
first time is called Initial Public Offering. The nominal
value of a share (the price written on it) is hardly ever
the same as its market price. Companies distribute
part of their profits to keep profits in the company. A
period during which most stocks are rising is called bull
market, and when must of them fall is called bear
market.
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Takeovers
Sometimes it is easier to take over with already existing
products and clients rather than coming up with a
new company. Acquiring a company that’s in the
same field is called horizontal integration. Buying
businesses involved in other parts of their supply chain
is called vertical integration. Backward integration is
acquiring suppliers of raw material and forward
integration is the same but with distributors or retail
outlets. To merge with another company is to combine
with it to form single one. A raid is to buy as many
shares as possible on a stock market. A takeover bid is
a public offer to a company’s stockholders to buy
stocks at any price during a limited period of time. The
buyer has to purchase 100% of the company’s stocks.
If the company doesn’t want to be taken over it’s a
hostile bid. A buyout is to buy people out of their
company through the emission of bonds. Private
equity funds are respected for buying companies and
making them more efficient.
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Glossary
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Cash Flows The money a company receives minus
the money it spends.
o Companies issue bonds to generate
cash flow.
Equity Part ownership of a company in the
form of stocks or shares
o People must pay a fair amount in
order to receive equity.
Mutual Funds Funds operated by investment
companies that invest people’s money
in various assets
o The company used mutual funds to
buy new machinery.
Pension Funds Funds that invest money that will be
paid to people after they retire from
work
o The company used pension funds to
buy assets. 26
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Coupon The amount of interest a bond pays.
o The coupon is an important part of a
bond.
Principal The amount of capital making up a
bond or another loan
o The principal is written on the bond.
Maturity The length of time for which a bond is
issued
o You must know a bonds maturity
date.
Bankrupt Unable to pay debts
o The company went bankrupt and
wasn’t able to pay off any of its
debts.
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Market Makers Businesses that buy and sell securities
o Secuguate is a market maker.
Creditor People or institutions to whom money is
owed
o Banks are usually good creditors,
Dividends Payments by companies to their
shareholders.
o The company made many dividends
last month.
Bid The price for which a buyer is prepared
to buy a security at a particular time
o Mr. Johnson was present at the bid.
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Kick-start To revive or stimulate something
o In order to become successful we
must have a powerful kick-start.
Yield The rate of income an investor receives
from a security.
o The yield of a bond depends on both
its purchase price as well as its
coupon.
Soared Rose quickly
o Our sales soared this week.
Offer Price The price for which a seller is prepared
to sell a security at a particular time
o The offer price for the share was
$20000.
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Rally An improvement or increase in prices
o This week we had a rally in the
company.
Benchmark Standard used when comparing other
things
o We used last month’s statistics as
benchmark for this month’s sales.
Recession Period where the economy is
contracting.
o Spain is having a recession.
Defaulting Failing to repay a loan
o The company has defaulted many
times during the last couple of years.
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Retail Outlets Places where goods are sold
o Supermarkets are the most common
retail outlets in Guatemala,
Controlling Interest Market Sufficient number of shares to be able
to decide what to do
o Mr. Botran has the controlling interest
market.
Go Bust Going bankrupt
o The company went bust last year.
Diversified To become more varied or different
o We want to diversify our products.
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Synergy Power when things combine is greater
than when separated.
o Companies that merge show a lot of
synergy.
Fees Amount of money paid for a service
o This month’s fee was higher than the
last one because expenses
increased.
Conglomerates Companies that owe smaller
companies selling different products.
o Companies conglomerate in order to
reduce their competition and
become better companies.
Listed Companies Public companies whose stocks are
traded on a stock exchange.
o I’ll be looking at this month’s listed
companies before I decide which
stock to purchase.
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Pension Fund A sum of money reserved to pay a
company’s retired employees.
o A company’s pension fund should
always be up to date.
Market Capitalization Total value of a company on the stock
exchange
o Walmart has a high market
capitalization.
Subsidiaries Companies that are owned by a larger
parent company
o McDonald’s has many subsidiaries.
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Partial Test
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Reflective Essay
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Opening the Doors
to the Business
World
Commercial and marketing are two subjects in which we learn about
the business world and some of the things we need to know in order to
be successful in it. Throughout the year we’ve been learning a little bit
of every business-related topic. Going step by step, each unit
challenging ourselves more.
Throughout the unit, in marketing, we learned about bonds, shares and
takeovers. We learned how companies can generate cash flow by
issuing bonds or selling shares. We also learned about mergers and
takeovers. When two companies merge, they combine themselves
and form a new company and maximizing to create synergy. A
takeover is when a company acquires another one and the acquired
company completely loses its identity.
In commercial we learned how to write not only credit and collection
letters, but we also learned how to write in-house correspondence. You
can write a credit letter when you want to apply for credit, give or ask
for references and when you either grant or refuse a credit application.
You use collection letters when you wish to collect money from an
overdue bill. In-house correspondence is used to prevent
misunderstandings within the company.
They are both interesting subjects from which we learn a lot. Teachers
do their best to explain certain topics to us but it’s up to each and every
one of us to pay attention in class, that way we understand better, and
to put everything we’ve learned throughout the year in practice.
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