Stage 7 Expanded Reading
In this stage you are expected to broaden your horizon into the topic of the lecture.Please read the following article carefully.
The Euro Crisis and the Retail Sector
Since the financial crisis struck the globe on September 15,2008 when the giant US investment bank Lehman Brothers collapsed,a wave of debt crises has swept the European Union,threatening various countries with default and putting the future of the euro in danger.
Most commentators trace the beginning of the European sovereign debt crisis to November 5,2009 when Greece revealed that its budget deficit was 12.7% of gross domestic product(GDP),more than twice what the country had previously disclosed.As a matter of fact,the European sovereign debt crisis started as early as in 2008,with the collapse of Iceland’s banking system,and spread primarily to Greece,Ireland and Portugal during 2009 and then to Spain and Italy in 2010.The European sovereign debt crisis is characterized by the above-mentioned countries facing the collapse of financial institutions,high government debt and rapidly rising bond yield spreads in government securities.This debt crisis has led to a crisis of confidence for European businesses and economies.
In early 2012,McKinsey published an analysis of the euro crisis that detailed and quantified the many benefits of European monetary union and outlined some serious flaws in the eurozone’s design and execution.Since then,the threat posed by the crisis appears to have greatly dissipated.The European Central Bank’s Long-Term Refinancing Operation has distributed more than €1 trillion in three-year loans to more than 800 banks,providing relief to a beleaguered financial system.The European Stability Mechanism has also provided a lift.European national budgets are on the mend; the total deficits of the five countries generally thought most at risk—Greece,Ireland,Italy,Portugal,and Spain,or the GIIPS countries—have declined from €260 billion in 2010 to an estimated €150 billion in 2012.Europe’s politicians have begun to strengthen the union’s institutions,for example,by creating the Single Supervisory Mechanism.Perhaps the best news of all is that the imbalances in Europe’s economies—the differences in growth,investment,and wages that are usually addressed by monetary policy but are now beyond the reach of countries within the fiscal union—are beginning to reverse course.Statistics show the balance of trade among European countries and their trading partners; the differences in the balance of trade among the GIIPS countries and their northern neighbors are becoming less noticeable.
However,some cracks in the eurozone have only been patched over.While deficits are coming down,total debt levels appear unsustainable.Austerity budgets are not proving as successful as hoped.Our analysis of economic projections from the International Monetary Fund and the latest set of fiscal targets,embodied in the“fiscal compact,”suggests that these targets will be quite difficult for some countries to achieve.
As a result of prolonged uncertainty,investment as a share of GDP has declined sharply; in Italy and Spain,investment is now at the same level as in the mid-1990s.Unemployment continues at record levels,and private consumption is withering.Indeed,many believe that the crisis is now reaching its decisive phase.
While a number of scenarios are still in play,it appears that some kind of stabilization is most likely.But each nation’s path to a stable future—and,consequently,the actions that retailers should take —will vary considerably.In the countries most affected by the crisis,retailers must find a new economic model,as lost revenues cannot be countered adequately by cuts in operating expense:rents are fixed in the medium term,and stores need a minimum number of workers to operate.Given these conditions,retailers face some serious questions.Should a multicountry retailer pull out,difficult though this might be because of long-term leases?Should it perhaps sell a majority stake to a local entrepreneur,with options to later sell the rest or buy it back?If it chooses to stay,what can it do to benefit from the“down trading”that pinched customers now practice?Can it attract those customers by changing its assortment mix or by expanding its private-label offerings in lower price points?Can it selectively downsize the store network and shift sales from the shuttered stores to its online channel?Less affected countries face a long but more assured path to recovery.But consumer spending may not drive top-line growth in the near future.
In these circumstances,retailers must consider questions such as how to win in a stagnating market while contending with the ongoing shift from physical to online retail.To what extent should they redirect capital expenditure away from expansion or refurbishment of the physical store network to digital channels?Do they have the right balance of capital expenditure(that is,long-term bets)and operating expenditure(which provides shorter-term agility)?
In every eurozone country,two concerns are paramount.First,consider the risks associated with the supply chain.Nonfood retailers source a significant part of their goods from outside the eurozone and thus are exposed to significant exchange-rate risks.Second,this uncertainty and the current volatility in exchange rates call for a clear strategy on whether and how to hedge this risk.
Hope for the best but prepare for the worst:that’s sage advice at any time,and especially when the stakes are as high as they are in the eurozone.A good way to start thinking about the issues is with a boardroom discussion,followed by a series of scenario-based planning sessions that use the company’s cash flows,product movements,and relationships to generate an understanding of the precise implications for the company in every scenario.
(Source:adapted from“The Future of the Euro”.Copyright.2013 @ McKinsey & Company)
Task 1:Reading Comprehension Questions
The following questions are asked based on the above article.Please go back to the article and find the answers.
1.What are the characteristics of the European sovereign debt crisis?
2.What measures have been taken to cope with the financial crisis in the eurozone?
3.What are the problems that GIIPS used to have?
4.What kind of fiscal policy is the eurozone currently implementing?
5.Why is the euro crisis reaching a critical stage?
6.How do the countries most affected by the crisis differ from the less affected countries in choosing a path to recovery?
7.What characterizes consumers’ buying behavior?
8.What kind of market are retailers facing today?
9.What is the risk associated with outsourcing outside of Eurozone?
10.What is suggested as an effective solution for retailers operating in the Eurozone?
Task 2:Paraphrasing
Explain in English the underlined words and expressions in the context of the above article.
1.The threat posed by the crisis appears to have greatly dissipated.
2.Relief has been provided for the beleaguered financial system,and national budgets are on the mend.
3.Some cracks in the eurozone have only been patched over.Austerity budgets are not proving as successful as hoped.
4.Our analysis of economic projections from the International Monetary Fund and the latest set of fiscal targets,embodied in the“fiscal compact,”suggests that these targets will be quite difficult for some countries to achieve.
5.Should it perhaps sell a majority stake to a local entrepreneur,with options to later sell the rest or buy it back?If it chooses to stay,what can it do to benefit from the“down trading”that pinched customers now practice?
6.Can it attract those customers by changing its assortment mix or by expanding its private-label offerings in lower price points?Can it selectively downsize the store network and shift sales from the shuttered stores to its online channel?
7.Retailers must consider questions such as how to win in a stagnating market while contending with the ongoing shift from physical to online retail.
8.In every eurozone country,one of the two paramount concerns is the risks associated with the supply chain.
9.The current volatility in exchange rates call for a clear strategy on whether and how to hedge this risk.
10.A company should hold a series of scenario-based planning sessions that use the company’s cash flows,product movements,and relationships to generate an understanding of the precise implications for the company in every scenario.
Task 3:Translation
Read the article again and translate it into Chinese.
阅读文章参考译文：
欧元危机与零售业
2008年9月15日，美国投行巨头雷曼兄弟破产，引发了全球金融危机。与此同时，一波债务危机的浪潮也席卷欧盟，致使多国面临债务违约的风险，欧元的未来危在旦夕。
大多数评论家认为，欧洲的主权债务危机始于2009年11月5日。当时，希腊公布其财政赤字占国内生产总值的12.7%，高于之前所披露数值的两倍以上。实际上，欧洲主权债务危机早在2008年冰岛银行体系崩溃时就开始了，2009年蔓延至希腊、爱尔兰和葡萄牙，2010年波及西班牙和意大利。上述国家在这场欧洲主权债务中呈现出以下共同点：金融机构纷纷破产，政府负债率居高不下，国债收益率一路下滑。本次债务危机已演变成各方对欧洲商业与经济的信心危机。
2012年年初，麦肯锡公司发表了一份关于欧元危机的分析报告，对欧洲货币联盟的诸多优势进行了详述与量化。报告指出，欧元区在设计与实施中存在某些严重的缺陷。自那时起，危机所带来的威胁在很大程度上似乎被淡化了，因为欧洲中央银行推出的长期再融资操作，向800多家银行发放了超过1万亿欧元的三年期贷款，解救了四面楚歌的金融系统。欧洲稳定机制也起到了提振作用。欧洲各国的财政日趋好转。大家普遍认为深陷危机的五个国家——希腊、爱尔兰、意大利、葡萄牙和西班牙，亦称“GIIPS（戏称欧洲五猪）”——的负债总额，已从2010年的2 600亿欧元降至2012年大约1500亿欧元。欧洲的政治家们开始采取增强货币联盟体制的措施，比如创建了统一的监管机制。也许最振奋人心的是，欧洲经济体之间的不平衡，即在财政联盟中的国家之间存在的经济增长、投资和工资等方面的差异，现在正在缩小。以前这些问题常用货币政策去解决，但收效甚微。有数据显示，欧洲国家与贸易伙伴国的贸易平衡状况良好；GIIPS各国与其北方邻国之间的贸易差额正在逐渐减少。
然而，欧元区出现的麻烦才刚刚收拾完毕。尽管财政赤字正在下降，但目前债务总额的水平似乎难以维持，紧缩的财政预算并未达到预期效果。我们对国际货币基金组织的经济预测以及体现在“财政契约”中的最新财政目标进行了分析，结果表明对于某些国家来说，这些财政目标遥不可及。
由于存在着长期不确定性，投资占国内生产总值的比重急剧下降；意大利和西班牙目前的投资水平，与二十世纪九十年代中期持平。失业率仍然保持在历史高位，个人消费也日渐萎缩。的确，很多人都认为这场危机目前正处于关键阶段。
虽然本轮危机存在多种发展态势，但最有可能出现的是趋向稳定。不过，各国走向未来稳定的路径各不相同，因此，各国零售商采取的行动也会大相径庭。在遭受危机重创的国家，零售商必须找到新的经济模式，削减运营支出不足以弥补收入损失，这是因为中期的租金是固定不变的，同时商店还需聘用少量的工人以维持运营。在这种情况之下，零售商面临以下严峻的问题：虽然因长期租约而难以抉择，但是跨国零售商是否应该坚持退出国外市场？是否应该把大部分的股份卖给当地的企业，并保留将来卖掉剩余股份或回购已售股份的权利？如果选择留守国外，那么针对拮据消费者目前低档消费的局面，跨国零售商应该如何从中获益？是否可以通过改变商品的混搭销售，或者扩大低端自有品牌的生产来吸引顾客？是否可以有选择地缩减实体店数量，关闭经营不善的门店，然后将产品销售转移到线上渠道？对于受危机影响不大的国家，经济复苏虽然路途遥远，但是前途依旧光明。不过，消费支出近期难以推动营业收入的增长。
在这种情况下，零售商必须要思考的问题是：1.面对实体零售转向线上零售，如何把握契机，从不景气的市场中胜出？2.减少扩大或装修实体店的资本支出，将其转移到线上渠道，但幅度应该多大？3.资本支出（即长期投资）与运营支出（即短期周转）的合理比例，如何确定？
每个欧元区的国家都必须考虑这两个至关重要的问题：第一，运营中存在着与供应链相关的风险，如非食品零售商的供货来源有相当大一部分来自非欧元区的国家，因此会面临很高的汇率风险。第二，汇率存在着不确定性，目前汇率大幅波动，因此，在是否需要套保以及如何套保的问题上，零售商必须制定明确的应对策略。
做最好的期待，做最坏的准备——这是一句经久不衰的至理名言，目前最适用于处于风雨飘摇的欧元区。万事开头难，因此，每个公司的高层都应该首先对问题进行讨论，然后召开一系列制定多种方案的会议。每个方案在制定时，都要结合公司的现金流、产品流向以及供销关系等因素，这样在未来实施时会给公司带来哪些具体的影响，便可一目了然。