Business English Practice: Going Public in IPO for Dunkin Donuts

Click on the linked picture above to go to a newsy.com video about Dunkin Donuts' filing of papers to begin its IPO public share offering. You can also find the written transcript together with the video  at [http://www.newsy.com/videos/dunkin-donuts-announces-plans-to-go-public/].

What is an IPO?

An IPO is an abbreviation using the initial letters of "initial public offering". It is an offering of shares in a company for sale to the public, for the first time by a private company, that will, through this sale, turn into a public company - whose shares, after this IPO, will be publicly traded on the open market.

SOME BACKGROUND ON DUNKIN DONUTS:

Dunkin Donuts is a very large food and beverage franchise chain that specializes in coffee and donuts. It has about 9,700 stores in total: around 3,000 outlets in 30 overseas countries and around 6,700 in the United States. To compare Dunkin Donuts to other multinational F&B franchise chains:

Number of Retail Locations

	FRANCHISE	Overseas	USA	TOTAL
	Starbucks coffee	6000	11000	17000
	Burger King	4000	8000	12000
	Dunkin Donuts	3000	6700	9700
	Domino's Pizza	4000	5000	9000
	Wendy's hamburgers	700	5900	6600

(source: dowloadable information from the respective corporate websites)

Dunkin Donut's sister company is the famous Baskin-Robbins ice cream specialty chain, both presently owned by the private holding company Dunkin Brands.

Dunkin Donuts' parent company purchased the second largest donut franchise, Mister Donut back in 1990, and essentially amalgamated it with Dunkin Donuts. The strange thing is, Mister Donut's master franchisee in Japan, retained the rights for Mister Donut throughout Asia, and to this day Mister Donut competes against Dunkin Donuts (which in the U.S. would be its sibling company) in many Asian countries.

This IPO is just one in a long line of transformational corporate maneuvers since DD beginning in 1950:

• The first Dunkin Donuts was opened in 1950 by Bill Rosenberg in Quincy, Massachusetts, now part of metropolitan Boston.

• Bill and his family grew Dunkin Donuts into market leadership for 40 years until it was acquired by the giant British liquor and food group, Allied Lyons, in 1990. (Baskin-Robbins was acquired much earlier by J. Lyons & Co. in 1973, which itself was later merged into Allied Lyons in 1978.)

• Allied Lyons acquired the second-largest donut chain, Mister Donut, in the same year, 1990. Looks like 1990 was a big year in donuts for Allied Lyons!

• Allied Lyons merged with Pedro Domecq (a leading producer of brandy and sherry based in Spain) to become Allied Domecq in 1994.

• Togo's great sandwiches joined the Alled Domecq stable when acquired in 1997.

• Dunkin Brands Inc., for the three restaurant brands, was created as a subsidiary of Allied Domecq in 2004.

• Allied Domecq was acquired by the French spirits giant, Pernod Ricard in 2005.

• Pernod Ricard, later in 2005, sold Dunkin Brands to "a consortium of private equity firms consisting of Bain Capital, The Carlyle Group and Thomas H. Lee Partners". (Togo's was sold off  by Dunkin Brands to "Mainsail Partners, a San Francisco−based private equity firm" in 2007 [http://en.wikipedia.org/wiki/Togo's]).

• The private equity owners of Dunkin Brands file for an IPO in May 2011.

  (For reference see [http://www.dunkinbrands.com/aboutus/history.html].)

It took Bill Rosenberg five years before he started franchising (1955). He was so successful that he was a leading founder of the International Franchise Association another five years later in 1960, an association which calls itself "the world’s oldest and largest organization representing franchising worldwide" [http://www.franchise.org/aboutifa.aspx]. Thus Dunkin Donuts has been central to the franchising industry since its early beginnings. The Association now represents over 1,300 franchising systems in different industry sectors, and includes all the leading franchising names.


Some notes on the language:

The video mentions some popular concepts in modern consumer retail marketing. Let's examine some of them:

• brand loyalty - This is what all brands seek to achieve: the increased tendency to repurchase one particular brand over other competitor brands. "Loyalty" is to follow very strongly and very strictly something regarded as superior. Thus businesses wish to have "loyal" consumers to the name/image/identity of one of their products - that is, loyal consumers towards their "brand". 

• in-store promotions - This is part of the promotional, advertising and communications mix of a commercial enterprise - all part of the mix that happens inside the physical retail store. This includes in-store displays, "point-of-sale promotions", product demonstrations, and various "merchandising" activities, and also often includes "sales promotions" inside the store.

• gift cards - Since their general introduction to the United States in the 1990's, gift cards have now become the No. 1 gift choice among Americans [Gift Card Trends at Deloitte.com]. It is a card, usually given as a gift, with some monetary value that can be spent according to the conditions of that card - usually within the one retail company. It has now become a very important marketing tool for retailers and very important to their total sales.

Practice your business English by watching and listening to the video above. For more detailed study, you can read the written transcript at the link given above.

Don't be scared if there is a lot that you don't understand. As long as you learn a little something new, then that is valuable: learning bit by bit is natural learning. By watching and listening, you will also be more exposed to, and more familiar with, various sentence structures and other language techniques used by English speakers.

I'll be happy to receive questions and comments from English learners, and I'll try to answer your queries here about the language in this video. I look forward to your comments!

[A rare opportunity for you to speak, practice, chat and learn English especially for business, finance, law, international economies & trade at the webpage for Mastery English by clicking on the Advisor button below.]

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Business English Practice: Iceland public refuses to repay in bankrupted Iceland bank case, casualty of Financial Crisis

Click on the linked picture above to go to a newsy.com video about a referendum in Iceland which rejected further compensation for overseas savers in the U.K. and Netherlands who suffered massive losses after the 2008 Financial Crisis collapse of Icelandic banks. In that aborted deal, Iceland would have had to use an amount equivalent to about 3% of GNP for the repayments. You can also find the written transcript together with the video at [http://www.newsy.com/videos/icelanders-say-no-to-repaying-britain-and-the-netherlands/].

The economic crisis that crystallized in late 2008 was a financial crisis - and nowhere was this truer, nor crisis greater, than in the very small nation that had very large banks... Iceland.

Iceland only has a population of around 300,000. However, their banks had overseas, many more customers than their entire national population - particularly in the United Kingdom and Netherlands. Banking assets in Iceland were at mind numbing levels of over 1,000% of GDP. However if we look at the figures below provided in 2010 by the economics editor of The Atlantic, many nations have surprisingly high ratios of bank assets to GDP. Greece, Italy, Portugal and Spain were "only" at ratios of 141%, 151%, 188% and 251% respectively. France was at a high level of 338%, and the following countries were much higher, in ascending order: Sweden, Belgium, the United Kingdom, the Netherlands, Denmark and Switzerland. The microscopic banking haven of Luxembourg topped the list at 2461%, with Ireland coming second at 872% - and so Ireland is now experiencing similar problems to what Iceland had to endure.

Bank Assets as a Percentage of GDP

COUNTRY	%	COUNTRY	%
Luxembourg	2461	Austria	299
Ireland	872	Spain	251
Switzerland	723	Germany	246
Denmark	477	Finland	205
Iceland	458	Australia	205
Netherlands	432	Portugal	188
U.K.	389	Canada	157
Belgium	380	Italy	151
Sweden	340	Greece	141
France	338	U.S.A	82

source: The Atlantic

If you remember, the wheels began coming off the US economy from late 2007, and economic problems began to pile up. In mid September 2008, after a frantic weekend of meetings between the U.S. Treasury Secretary, the Federal Reserve and some of the nations top bankers, it was announced on Sunday Sep 14 that America's fourth largest investment bank, Lehman Brothers would be made bankrupt (the fifth largest, Bear Sterns, had already gone under earlier in March and sold off to JP Morgan Chase Bank). One week after that, all top five investment banks were no longer there. (The ailing Merrill Lynch was sold off to Bank of America, and the the remaining top two, Morgan Stanley and Goldman Sachs, converted to more regular bank status to take advantage of easier capital conditions.)

Conditions in Iceland had also been deteriorating for over a year. After the September seismic shock from Wall Street, naturally,things got much worse. By the end of September, it was clear that Iceland's banks could not survive and the entire situation crashed in an alarmingly swift and abrupt fashion (with the same urgency that Wall Street had experienced). Glitnir and Landsbanki were placed into receivership on Oct 7; and after events in the U.K., the last remaining major Icelandic bank, Kaupthing, was also placed in receivership on Oct 9. During the entire period of chaos, the value of the Icelandic krona collapsed and inflation was out of control.

By January, popular protests brought about the collapse of the government, and elections were held on April 25, 2009. Iceland was the country hardest hit by the Financial Crisis, and was the "first government to fall as a direct result of the global economic crisis" said Reuters. The protests were popularly known as the "saucepan revolution": the protests were made by creating a  lot of noise with whistles, horns, and quite often with saucepans and pot lids. Timesonline.com wrote:

"When MPs gathered after their winter break on Tuesday, they were met by a large crowd creating a cacophony with everything from pots and pans to empty paint cans, whistles and musical instruments... Haarde has decided not to seek reelection as leader of the Independence party and announced that his party is willing to hold elections in May. After the saucepan revolution, it seems voters are going to get their demand for a new government."

Here are some photos of the Great Saucepan Revolution in Iceland, from flickr.com:

by olikristinn (Olafur Olafsson)

by olikristinn (Olafur Olafsson)

The British and Dutch governments compensated their local depositors for the collapse of the Iceland banks and contend that it is the Iceland government that should be liable for this compensation - but those in Iceland say those are private losses made with private banks. So far, the British and Dutch governments have not obtained full satisfaction for these claims against the Icelandic government.

The U.K. and the Netherlands have tried to negotiate deals with Iceland since the 2008 crisis. After much toing and froing, finally a bill implementing the agreement was successfully passed through the Icelandic parliament right at the end of 2009. However, Iceland's President (first elected to the presidency in 1996!) refused to sign the bill which had been passed, and he put the issue to a popular referendum in accordance with Iceland's constitution. The referendum, on March 6, 2010, rejected the agreement.

2010 passed, and a reworked agreement was accepted by Iceland's government and put to its parliament in December 2010 - but only completed its passing by February 2011. Bloomberg reported in January: "A majority of voters would back the latest deal, a Jan. 25 poll published by newspaper Frettabladid showed." And in February, it was approved by parliament with a handsome majority : the "plan was approved by a 44-to-16 vote in the 63-seat parliament." Once again, however, the President refused to sign the bill into law and put it to referendum one more time; and again the plan was rejected by voters, about 60% vs 40%. The results of this April referendum is the subject of this video.

The video refers to this dispute going to the European Free Trade Association (EFTA) Court. Iceland is not yet a member of the European Union (EU), although it applied for membership directly after the post-crisis election in 2009 as promised by the newly elected government. Yet CNN reported that the measure was only "narrowly" passed "by 33 votes to 28". However, Iceland is one of the only four remaining members of the much older EFTA (1960), together with the small nations of Liechtenstein, Switzerland and Norway. And together with Norway and Liechtenstein, made the small addition to the massive European Union in the 1994 creation of the slightly larger "European Economic Area" (EEA). The U.K. and the Netherlands will have to use the regulations of the EEA and EFTA to try and force Iceland to pay up.


Some notes on the language:

Here is a language activity based on the language in the video:

VOCABULARY - WORD POWER - The following words are often used to discuss the legal aspects of business relationships:

A) Can you guess what was the word used in the video...?
(For quick ANSWERS, just mouseover the blanked vocabulary item, and mouseover text will appear with the answer.)

1) Icesave collapsed in late 2008, and Britain and the Netherlands compens_______  their nationals who lost 3.9 billion euros in savings.

2) Iceland will hope for the ruling to decide that it does not have a legal oblig_______  to repay the four billion euros.

3) The Government is now expected to lodge a claim against Iceland, although the case could take years to resol_______ .

4&5) The authority says Iceland vio________  rules by not backing Icesave depositors - and by reim__________  domestic depositors but not foreigners.

6) It has signed up to many of the European Union's financial and trade rules - among them a requ________ that countries maintain deposit-insurance systems.


B) Once you are familiar with the vocabulary above, now let's try to use that vocabulary. Can you decide what is the correct NOUN or VERB form of the vocabulary above to use in the following sentences? How good is your grammar? (I have added a few letters to the blanks to give you extra help in finding the right word. For quick ANSWERS, just mouseover the blanked vocabulary item, and mouseover text will appear with the answer.)

When you buy a car to drive, you are 1) _______ir______ to pay insurance for that car in case of damage or injury that your car could cause. This is a legal 2) _____ig_______ set out by statute law. That law 3) _____ig_______ all car owners to purchase car accident insurance. It is a 4) _______ir______ that no car owner can avoid. If you 5) _____la______ this law, then you will be punished with a fine.

If your car is damaged in an accident and you have to repair your car, you will want to be 6) ________ur______ by your insurance company. If someone is injured in that car accident, they will seek 7) ______en________ . Hopefully, your insurance will help to 8) ______en________ that injured victim. If you cannot get money from your insurance company and you have to pay the injured victim yourself, then it will be difficult to get 9) ________ur______ from anyone else at all.

When liability is in dispute, instead of going to court to determine the amounts of money to be paid, people sometimes go to a less expensive arbitrator to find a 10) ___es________ to the dispute. This should be a much quicker and cheaper way to 11) ___es________ the dispute.

So when you are driving, be careful. Try to avoid any 12) _____la______ of the traffic rules - it could end up to be quite expensive!


ANSWERS:
A 1) compensated, 2) obligation, 3) resolve, 4) violated, 5) reimbursing, 6) requirement
B 1) required, 2) obligation, 3) obliges OR obligates, 4) requirement, 5) violate, 6) reimbursed, 7) compensation, 8) compensate, 9) reimbursement, 10) resolution, 11) resolve, 12) violation


Practice your business English by watching and listening to the video above. For more detailed study, you can read the written transcript at the link given above.

Don't be scared if there is a lot that you don't understand. As long as you learn a little something new, then that is valuable: learning bit by bit is natural learning. By watching and listening, you will also be more exposed to, and more familiar with, various sentence structures and other language techniques used by English speakers.

I'll be happy to receive questions and comments from English learners, and I'll try to answer your queries here about the language in this video. I look forward to your comments!

[A rare opportunity for you to speak, practice, chat and learn English especially for business, finance, law, international economies & trade at the webpage for Mastery English by clicking on the Advisor button below.]