3 Business. and Money

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1 CHAPTER 3 Business and Money Prosperity is a way of living and thinking, and not just money or things. Poverty is a way of living and thinking, and not just a lack of money or things. Eric Butterworth Author, scholar 46 har95106_ch03-rnd05.indd 46

2 In this CHAPTER In Part 1, you will read about organizations that are helping people escape from poverty. In the rest of this chapter, you will read about, discuss, and explore why people buy things, advertising, and consumerism. Connecting to the Topic 1 Describe the two businesses that you see in the picture. How are they similar? How are they different? 2 Name five things (products) that you shop for. Name five services that you shop for. 3 Name seven ways that a small or large business can advertise its products or services. 47 har95106_ch03-rnd05.indd 47

3 PART 1 Reading Skills and Strategies Banking on Poor Women Before You Read 1 Previewing the Topic Look at the photos and discuss the questions. 1. Compare the social or economic classes of the people in the photos below. What are some words to describe their economic situations? 2. What might the businessmen with the laptop be discussing? Think of three possibilities. 3. What is necessary in order to get a business loan (to borrow money) from a bank? A woman weaving A produce market International business 48 CHAPTER 3 har95106_ch03-rnd05.indd 48

4 4. Is it possible for people to move up in their economic class? (If so, how?) Is there more possibility of this in some countries than in others? 5. Brainstorm about the problems of very poor people. Then brainstorm possible solutions to these problems. Write your ideas in the chart below. Problems Possible Solutions 2 Thinking Ahead Read these quotations. Can you state them in other words? Which one(s) do you like or agree with? Why? Discuss them in a group. From borrowing one gets poorer and from work one gets richer. Isaac Bashevis Singer, Novelist ( ) A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain. Robert Frost, Poet ( ) 3 Previewing Vocabulary Read the words and phrases below. Listen to the pronunciation. Put a check mark ( ) next to the words that you don t know. Don't use a dictionary. Nouns access capacity character collateral eradication fund grants literacy microlending poverty requirement Verbs funding invest lift Adjectives anonymous social subsidiary worthless Expressions peer pressure took (take) the initiative Business and Money 49 har95106_ch03-rnd05.indd 49

5 Strategy Getting Meaning from Context: Understanding e.g. and i.e. Sometimes certain abbreviations (shortened forms of words) help you understand a new word or phrase. Here are two. e.g. = for example i.e. = that is; in other words 4 Getting Meaning from Context Read the sentences below. Use a highlighter to mark the words that give clues to the meaning of the underlined word(s). Then answer the questions. 1. This is a group of entrepreneurs i.e., people who own and run their own small businesses. What are entrepreneurs? 2. Instead of collateral, there is peer pressure; i.e., group members make sure that each person pays back his or her loan. What happens when there is peer pressure? 3. The Global Fund for Women helps find solutions to social ills e.g., violence against women, lack of health care, and lack of education. What are examples of social ills? Strategy Recognizing Similar Meanings but Different Parts of Speech Sometimes the context of a sentence has an explanation of the new vocabulary, but in order to think of a synonym, you need to change the part of speech. Example For many people, there seems to be no escape from poverty; in other words, they are poor, and they have no hope that this will change. In this example, you see that poverty is close in meaning to poor, but the two words have different parts of speech. Poverty is a noun, and poor is an adjective. (Poverty is the condition of being poor.) 50 CHAPTER 3 har95106_ch03-rnd05.indd 50

6 5 Recognizing Synonyms Highlight the words below that have the same or almost the same meaning as the underlined words. Then write your answers to the questions that follow. If this woman wants to borrow money, she must show that she (1) is honest (has character), (2) is able to run her business (has capacity), and (3) owns a house or land or something valuable. 1. What part of speech is character? 2. What does character mean? 3. What part of speech is capacity? 4. What does capacity mean? Strategy Using Parts of Speech to Understand Vocabulary Sometimes the context of a sentence does not give a clear definition or example of a new word. You can t be sure about the exact meaning, but you can still make an intelligent guess. First, figure out the part of speech of the new word. Then think about what other word might be logical in that place. Example Everyone in the group must approve the loan of every other group member, or Grameen Bank won t lend the money. verb agree to; say OK about; sign Some of your guesses might be wrong, but that s not a problem. If you see the word again in a different context, the meaning will become clearer. 6 Using Parts of Speech to Understand Vocabulary Make guesses about the underlined words below. Don t worry about being right or wrong. Just try to be logical. When you finish, compare your answers with a partner s. 1. A poor woman has an idea to lift herself and her family out of poverty. Business and Money 51 har95106_ch03-rnd05.indd 51

7 2. The primary goal of Grameen Bank and other similar programs is the eradication of poverty. 3. As poverty has decreased, there have been some surprising secondary effects of microlending programs. Perhaps the main subsidiary effect has been a change in the social status of women. 4. She began the Global Fund for Women. This fund has given $37 million to over 2,500 women s groups. It gives grants, not loans. The money is given, not lent. fund grants 5. With careful planning and cooperation, most people use the money well and then invest both money and knowledge back into their communities. Read 7 Reading an Article As you read the following article, think about the answer to this question: How can banks help poor women change their lives? Then do the activities that follow the reading. A Banking on Poor Women For many people, there seems to be no escape from poverty; in other words, they are poor, and they have no hope that this will ever change. In addition, they have the social problems of poverty among them, low social status, violence, poor health, and lack of education. Imagine this situation: a poor woman has an idea for a small business to lift herself and her family out of poverty. She needs a little money to begin this business. She goes to a bank to borrow the money, and the banker interviews her. At this bank, as at most banks, the borrower must meet three necessary conditions: character, capacity, and collateral. That is, if this woman wants to borrow money from the bank, she must show that she (1) is B CHAPTER 3 har95106_ch03-rnd05.indd 52

8 honest (has character), (2) is able to run her business (has capacity), and (3) owns a house, land, or something valuable (has collateral) for the bank to take if she can t pay back the money. So what happens to the woman? The bank won t lend her the money because she doesn t have any collateral. In such a situation, there seems to be no way for the woman to break the cycle of poverty and the problems that are associated with it. 15 C Microlending One possible solution these days is microlending. This is a system of special banks and programs that are loaning money to the poorest of the poor. The idea began in Bangladesh, with a man named Mohammad Yunus, who founded Grameen Bank. The bank lends small amounts of money to people who want to go into business. These are people who could never receive a loan from a regular bank. To receive a loan through Grameen Bank, people still must have character and capacity, but collateral is not necessary any longer. There is a different requirement: each borrower must join a borrowing group. This small group meets regularly, follows a list of rules from the bank, and offers advice and support to members. Instead of collateral, there is peer pressure; i.e., group members make sure that each person pays back his or her loan. They want to keep their good name and continue doing business with the bank D What Works, What Doesn t Grameen Bank has had many successes and only a few failures. In a developing country such as Bangladesh, a person can buy a cow or a sewing machine and begin a small business with only $20 to $50. Today, there are 8.35 million borrowers in 81,379 villages in Bangladesh. The bank makes over $123 million in loans in a typical month, and the repayment rate is an amazing percent. At first, the bank lent half of the money to men and half to women. Unfortunately, most of the Bangladeshi men spent the money on themselves, not the business. Now, 96 percent of the borrowers are women. In Bangladesh and other countries that started similar microlending programs the bankers soon learned that urban programs were not as successful as rural ones. Borrowers in cities did not always repay the loans. Because of the importance of peer pressure, microlending is more effective in small villages, where everyone knows and depends on everyone else, than in urban areas (where it s possible to be anonymous unknown) E Subsidiary Effect The primary goal of this and other similar programs is the eradication of poverty. However, as poverty has decreased, there have been some surprising secondary effects of microlending programs. Perhaps the main subsidiary effect has been a change in the social status of women. Traditionally, in 45 Business and Money 53 har95106_ch03-rnd05.indd 53