Read the article below about five forces affecting strategy, and the questions on the opposite page. For each question(13-18), mark one letter(A, B, C or D)on your Answer Sheet. The Five Competitive Forces That Shape Strategy In essence, the job of the strategist is to understand and cope with competition. Often, however, managers define competition too narrowly, as if it occurred only among today’s direct competitors. Yet competition for profits goes beyond established industry rivals to include four other competitive forces as well: customers, suppliers, potential entrants, and substitute products. The extended rivalry that results from all five forces defines an industry’s structure and shapes the nature of competitive interaction within an industry. They are the threat of new entrants: bargaining power of suppliers: the threat of substitute products or services: bargaining power of buyers and rivalry among existing competitors. As different from one another as industries might appear on the surface, the underlying drivers of profitability are the same. The global auto industry, for instance, appears to have nothing in common with the worldwide market for art masterpieces or the heavily regulated health-care delivery industry in Europe. But to understand industry competition and profitability in each of those three cases, one must analyse the industry’s underlying structure in terms of the five forces. Understanding the competitive forces, and their underlying causes, reveals the roots of an industry’s current profitability while providing a framework for anticipating and influencing competition(and profitability)over time. A healthy industry structure should be as much a competitive concern to strategists as their company’s own position. Understanding industry structure is also cardinal to effective strategic positioning. As we will see, defending against the competitive forces and shaping them in a company’s favour are crucial to strategy. The configuration of the five forces differs by industry. In the market for commercial aircraft, fierce rivalry between dominant producers Airbus and Boeing and the bargaining power of the airlines that place huge orders for aircraft are strong, while the threat of entry, the threat of substitutes, and the power of suppliers are more benign. In the movie theatre industry, the proliferation of substitute forms of entertainment and the power of the movie producers and distributors who supply movies, the critical input, are important. Industry structure drives competition and profitability, not whether an industry is emerging or mature, high tech or low tech, regulated or unregulated. The strongest competitive force or forces determine the profitability of an industry and become the most important to strategy formulation. The most salient force, however, is not always obvious. For example, even though rivalry is often fierce in commodity industries, it may not be the factor limiting profitability. Low returns in the photographic film industry, for instance, are the result of a superior substitute product— as Kodak and Fuji, the world’s leading producers of photographic film, learned with the advent of digital photography. In such a situation, coping with the substitute product becomes the number one strategic priority. Industry structure grows out of a set of economic and technical characteristics that determine the strength of each competitive force. We will examine these drivers in the pages that follow, taking the perspective of an incumbent, or a company already present in the industry. The analysis can be readily extended to understand the challenges facing a potential entrant.

Look at the statements below and the text about the marketing principle on the opposite page. Which section(A, B, C or D)does each statement(1-7)refer to? For each statement(1-7), mark one letter(A, B, C or D)on your Answer Sheet. You will need to use some of these letters more than once. Example: 0 The purchase of customers is not to achieve the ownership of the product. [*] Marketing Principle A Brilliant marketers try to keep open and flexible, yet there is one unchanging maxim which they share:customers buy products to acquire benefits. Those few words hold the secret of many an innovative organisation’ s success. It is a principle which can be applied to almost any product/market decision. The principle itself is almost deceptively simple,which is why some marketers pass it by. The successful marketing organisation will pay more than lip service to its meaning, because it represents the most basic yet most important principle of marketing. B Customers do not buy a product for the product itself. Customers buy clean floors,not floor polish. They buy security,not insurance policies,high performance engines(or status),not Ferraris:better lubrication, not industrial cutting oil. An innovative tool manufacturer realised,through the course of its relationship with its customers,that a major problem on the production floor was the time lost in changing abrasive discs. With this in mind, the manufacturer has in the past few months been exerting himself to get the problem solved with the help of a group of technicians. C The company invested a lot of time and money in seeking a solution, and invented a highly specialised system of binding grit to disc. The result was a new disc which had a longer life and could be removed and replaced faster than the old type. This gave the organisation’s customers the benefit of more efficient production time and better value for money. The benefit in the example served a dual purpose: it gave the customer the advantage of time-saving and cost-effectiveness, and at the same time solved a traditional problem of changing discs. The ’ problem’ in this case was a customer need which had to be satisfied. D The concept of customer benefits shows the importance of an organisation being orientated towards the customer,or market,rather than the product. An organisation, for example, manufacturing adding machines in a marketing environment which is moving towards calculators will soon find itself and its product obsolete. It must consider what the benefits of its product are—in this case computing sums accurately and quickly—and make sure that it is providing that benefit better than any other organisation. If a more cost-effective method of computing comes along, the customer will naturally be attracted to that product which incorporates those developments and can therefore provide increased benefits.

Read this text taken from an article about franchising. Choose the best sentence from the opposite page to fill each of the gaps. For each gap(8-12), mark one letter(A-G)on your Answer Sheet. Do not use any letter more than once. There is an example at the beginning(0). What is Franchising Franchising is one of three business strategies a company may use in capturing market share.(0)G . Franchising is a business strategy for getting and keeping customers. It is a marketing system for creating an image in the minds of current and future customers about how the company’s products and services can help them.【P1】______ Franchising is a network of interdependent business relationships that allows a number of people to share: a brand identification, a successful method of doing business, a proven marketing and distribution system. In short, franchising is a strategic alliance between groups of people who have specific relationships and responsibilities with a common goal to dominate markets, i. e., to get and keep more customers than their competitors. Other franchisees and company operated units are not your competition.【P2】______. They and you share the task of establishing the brand as the dominant brand in all markets entered and reinforcing the customers’ familiarity with and trust in the brand.【P3】______ Other franchisees share with you the responsibility for quality, consistency, convenience, and other factors that define your franchise and insure repeat business for everyone. Increasing the value of the brand name is a shared responsibility of the franchisor and franchisee. A company franchises because it wants to quickly and in great numbers replicate its successful company operations without significantly increasing its debt. 【P4】______. In franchising, the operating system becomes identified with the brand or trade name that you license as a franchisee. Each franchise system uses precise methods to service and satisfy the customer. 【P5】______. Because customers don’t like surprises, this consistency in operations, unit to unit, builds customer loyalty to the brand. Franchising is successful because we are people of habit and are brand-driven when we purchase goods and services. We trust brands that we see everywhere, every day. We tend to be loyal to a product or service delivered to us the same way all the time. Example:[*] A So in this respect you are working as a team with others in the system. B By documenting these practices, the franchisor institutionalises the buying experience. C Because it has been successful in teaching its own employees to operate the business, the company believes it can repeat the same success by teaching others to do it. D It is a method for distributing products and services that satisfy customer needs. E Under the help of them, franchisors can easily enjoy the convenience brought by franchising. F On the contrary, both of you are partners under the same system. G The others are company owned units or a combination of company owned and franchised units.

Read the article below about the ways to improve employees’ motivation. Choose the best word to fill each gap from A,B,C or D on the opposite page. For each question(19-33), mark one letter(A,B,C or D)on your Answer Sheet. There is an example at the beginning(0). How to Improve Employee Motivation Do you think your employees are lacking the motivation(0)A do their job efficiently? With the economy in a downturn,【C1】______morale is at an all-time low and it’s not surprising that motivation is taking a dive.【C2】______a supervisor, it is your responsibility to help keep your employee motivation up. High employee【C3】______means better work, less employee turnover, and a more positive work environment. There are some ways to improve your employee’s motivation. Set goals. Set weekly, monthly, and【C4】______goals. Set up an inter-office visual to track progress and spark some healthy competition between employees. Have meetings often to discuss goal【C5】______and progress of their goals. Being able to cross several items off of their goal during each meeting is【C6】______rewarding and will help increase motivation. Reward employees【C7】______reaching goals. Be creative with your reward system—it doesn’t only have to be monetary. Rewards can be as【C8】______as bagels in the morning, taking the team out to lunch, a VIP parking spot, etc. Showing an employee that you【C9】______gratitude can be all you need to increase employee motivation and have them start performing better at work. Commend solid work. Remember not to let any good work go unnoticed. A simple “Great Job【C10】______that Sales Analysis Report!“ while【C11】______each other in the hallway can go a long way. Employee’s thrive on recognition and will work harder to get that next compliment. Implement an open door【C12】______. Keep your office open to employee suggestions and concerns. Let your co-workers know that you are【C13】______to make changes based on their suggestions—after all they are the ones that have the hands-on experience with how most of the work is being handled. Create a【C14】______work environment. A little water cooler talk is healthy, but frown upon excessive office gossip that can bring down morale. If you hear someone talking bad about a co-worker or spreading a【C15】______, stop them in their tracks. There’s no quicker way to bring down an office than a bad wave of office gossip. Example: A to B from C by D on [*]

Read the article below about customer service. In most of the lines(34-45), there is one extra word. It either is grammatically incorrect or does not fit in with the meaning of the text. Some lines, however, are correct. If a line is correct, write CORRECT on your Answer Sheet. If there is an extra word in the line, write the extra word in CAPITAL LETTERS on your Answer Sheet. The exercise begins with two examples(0 and 00). [*] Customer Service 0 Customer service is the practice of providing customers with a positive, helpful experience 00 when they enter to such a business, throughout the time they stay at the business, and even 【M1】after the customer leaves for, should they have additional questions or products to return. 【M2】Many stores and other businesses spend in a great deal of time training their employees to 【M3】provide great customer service, because of it makes a customer more likely to become a 【M4】returning, loyal client. There are a lot number of different ways that employees can provide 【M5】great every service to a customer, and most do not take much extra effort at all. In a store, for 【M6】example, all of which the employees should be focused on providing excellent customer 【M7】service to everyone who unlikely comes in. This begins with greeting a customer when they 【M8】enter the store, and asking the customer if he or she needs help with anything. In addition, 【M9】the employees should less remain available while the customer is shopping, in order to 【M10】answer questions or offer assistance. Many stores also have a designated counter for 【M11】ever customer service, where customers may stop in order to return products, place 【M12】special orders, or ask questions. Other businesses provide customer service in only different ways.

The role of the five competitive forces is to make a company

What do we learn about the global auto industry in the second paragraph?

What does “cardinal“ mean in the third paragraph?

Five competitive forces differ in different industries because

The writer suggests that the strongest competitive force or forces

What does “grows out of“ mean in the last paragraph?