Corporate Entertainment

Russell Evans

Pre-reading task

You are going to read an article about how companies develop relationships with their customers， suppliers and other influential business partners. Before you read， think about where you work. Have you ever been to lunch with or received a gift from someone you have a business relationship with？ How did it affect your relationship？

Corporate Entertainment

By Russell Evans

A

Companies are in the business of making money. To do this they must build and keep relationships with the people they work with. And one way to establish and develop connections with customers is to make them feel special. By treating your clients as VIPs， perhaps you can ensure that they dont find new suppliers for the goods and services you provide. When given the choice between a company which takes you out to a nice lunch and one which expects you to buy your own sandwiches， the choice for most is obvious. For this reason， it is common in the business world for organisations to have an entertainment budget for taking their clients out.

B

Corporate hospitality can take many forms. At one end of the range， some organisations produce key rings， pens or calendars which can be given as small gifts to the people they do business with. A step up from this is a lunch or dinner with a favoured customer in a good restaurant. The company hopes that by removing you from the office environment， spending a little cash on you and perhaps getting you a little drunk， it can agree a deal which might not be achievable in a more formal business setting. Towards the top end of the scale， many major sporting venues now offer ‘corporate boxes for the guests of the companies that pay for them. A VIP suite at the ground of a top English Premiership football team can cost as much as ?5，000 per person per match. Corporate entertainment packages for the London Olympic Games in 2012 cost ?55，000 for a group of ten people. There are many cheaper options， but whatever the budget， the emphasis is always on making the lucky customer feel special. Corporate boxes have the best views of the action， free drinks and world-class food， all in comfortable air-conditioned surroundings. And although the cost of these boxes varies with the sport and venue， one thing is certain： they are out of the reach of ordinary sports fans who just want to watch a tennis tournament or a game of football.

C

There is a popular saying that there is no such thing as a free lunch. This means that companies always expect something back when they give you a gift. So if an organisation gives you a ‘free lunch， what exactly does it expect in return？ Most corporations will tell you that company hospitality has been part of business culture for as long as people have been trading. They will say that taking clients out for the day is a form of face-to-face marketing which helps to make existing relationships stronger and build new ones. Others may claim that hospitality allows companies to reward loyal customers. These benefits are important， but is there an even more straightforward explanation？ According to a website offering advice for new companies， the chief executive of one particular British plc says that his company has a simple formula. For each ?1，000 the company spends on entertainment for clients， it wants an extra ?5，000 in income from those customers. Another UK company in Information Technology says that when they spend ?150，000 on hospitality， they want to see revenue increase by ?1，000，000. And the managing director of a recruitment firm says the company wants a return on its expenditure of twenty times the cost for existing customers and ten times the cost for new clients. ‘Free lunches for customers， it seems， can cost five， ten or twenty times the value of the meals.

D

A free pen is not likely to influence a major business decision， but is that true for a visit to an expensive sporting event？ When companies are spending thousands of pounds on you， they clearly expect something in return. Where is the dividing line between acceptable business practice and corruption？ These questions can raise difficult questions for the business community and for governments. Recent laws in both the UK and USA have tried to separate hospitality and illegal activity. The UK governments advice is that hospitality is legal， so companies can continue to provide tickets to sporting events， take clients to dinner and offer gifts to clients if those things are reasonable and not excessive. Bribery， on the other hand， is not legal. If you spend too much on customers， you can get into trouble. If the entertainment encourages your clients to act improperly， or rewards them for having acted improperly， you may be acting illegally. And if you are trying to influence a decision-maker into doing something improper for you in return， such as award you a big contract， you may find yourself in court.

E

If you think the distinction between offering proper hospitality and seeking improper influence is not clear， you are not alone. There is a mismatch between what businesses traditionally do in their own interest， and what governments think they should be allowed to do. In these circumstances， the best advice is to be very cautious when offering or receiving hospitality. And the next time you are drinking free champagne on a luxury yacht as you watch the Grand Prix at the invitation of a company that wants your business， try not to let that affect any business decisions you make.

You should spend about 20 minutes on questions 1—14 below， which are based on the reading passage.

Questions 1—5

This article has five paragraphs， labelled A—E. Choose the correct heading for each paragraph from the list of headings （i—viii） below. You do not need to use all the headings.

List of headings

Be careful when giving or accepting gifts

Difficult distinctions

Five-star hotels and company yachts

From a key ring to a week at Wimbledon

Hospitality and tax loopholes

Keeping the customers happy

Return on investment

Unhappy clients are bad for business

1. Paragraph A Heading ______

2. Paragraph B Heading ______

3. Paragraph C Heading ______

4. Paragraph D Heading ______

5. Paragraph E Heading ______

Questions 6—10

Complete the sentences below. Use ONE WORD from the text for each answer.

6. Many companies include a hospitality ______ in their annual accounts which is intended to pay for all corporate entertainment.

7. Taking clients out for a meal can often result in a more favourable ______ than might be reached in an office environment.

8. One of the claims of businesses is that corporate entertainment is a way of rewarding clients who are ______.

9. According to the author， it can be difficult to decide if expenditure on gifts and hospitality is acceptable， or if it crosses the line into ______.

10. UK law says that for gifts to be legal， it is essential that they are not excessive and are ______.

Questions 11—14

Are these statements TRUE， FALSE or NOT GIVEN according to the text？

Answer TRUE if the statement agrees with the text.

Answer FALSE if the statement contradicts the text.

Answer NOT GIVEN if there is no information on this.

11. Corporate entertainment has a long history in the world of commerce.

12. One leading UK firm expects a return of ?15 for each ?1 it spends on hospitality.

13. The financial rewards and influence which companies seek from hospitality raise some serious issues about right and wrong.

14. The author sees a clear distinction between what is legal and what is not.

Answers

1. vi; 2. iv; 3. vii; 4. ii; 5. i; 6. budget; 7. deal; 8. loyal; 9. corruption/bribery; 10. reasonable; 11. TRUE;

12. NOT GIVEN; 13. TRUE; 14. FALSE