The Business 2.

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Review Test 2  Units 5–8 Name:

Total:
Part 1 Reading
Text 1  7 points
Questions 1–7
Read the extract below from an article about the use of mobile phones in marketing. Choose the
best sentence from the list to fill each of the gaps and mark a letter A–H. Do not use any letter
more than once. There is an example at the beginning, (0).

Making digital marketing mobile

Mobile phones are changing the way we communicate
forever. Today’s mobile phone users are not using their
devices just to talk. Now, the mobile phone is a source for
news, views and entertainment, a window into the world.
(0) D Industry experts believe that the most successful
players in the digital marketing era will be those that best
connect the power of the Internet with the flexibility of
mobile phone communication.
The fact is that mobile phones have a number of unique
advantages over traditional media in advertising, and other
marketing activities, which, if leveraged, have the potential
to make mobile marketing the most promising tool in the
modern marketers’ arsenal.
(1) Since governments control the number of mobile
operators in many countries by offering limited licenses,
operators are able to acquire a huge subscriber base which
could serve as a powerful marketing platform for businesses
operation in other sectors – at a price.
(2) Such a resource is both a valuable asset for the
mobile operator and a powerful and exciting tool in itself.
One of the reasons is that phone operators have a much
better understanding of their customers’ consumption
patterns than traditional media owners. They can even
identify the personal hobbies and character traits of
subscribers through their use of content-rich data services.
This kind of resource makes possible the kind of precise
customer segmentation and niche market identification that
most marketers can only dream of. (3) For example,
a customer queuing to be served at a fast food restaurant
could receive a discount on a set lunch or free gift with their
meal using an e-coupon downloaded to their mobile phone.
On-site advertising can also be combined with information
on the customer’s personal interests and consumption
preferences to create a truly precise real-time marketing tool.
The ongoing development of mobile phone technology,
especially in the 3G era, has meant mobile phones have
become an electronic multimedia device rather than simply
a communications tool. (4) Advertisers have unlimited
scope to explore new creative ideas. Like the Internet,
mobile phone technology can facilitate a truly interactive
encounter between marketer and potential consumer.
Furthermore, as consumer artefacts, mobile phones are
among the most powerful symbols of individuality in the
modern world. (5) This makes it possible to tailor
marketing to individual tastes, allowing sellers to promote
their image by targeting only those consumers that have
signalled interest. For instance, mobile subscribers can opt
in to receive marketing information from specific brands or
businesses. (6)
Finally, the cost of delivering advertising via mobile phone,
be it through SMS, MMS, streaming media or any other
technique, is significantly lower than via traditional formats
such as TV and print.
(7) The mobile phone is also ideal for monitoring
marketing performance and allowing more science-based
management of marketing activities, including advertising,
sales, service, product development and pricing.

A The extensive and increasingly data-rich subscriber profiles that mobile operators have at their
disposal are the sort of resource that marketers would be willing to pay good money to access.
B This is particularly attractive to advertisers as it helps to ensure that their marketing spend is
directed only at receptive users.
C From appearance to colour, from ringtone to MMS, everything about a mobile phone bears
witness of the character and tastes of its user.
D Alongside the Internet, mobile phones have become the great communication medium of
modern times and, as such, are threatening to revolutionize the world of marketing.
E As well as costing less, mobile advertising also has a significantly greater chance of reaching the
eyes of its target audience than advertising through traditional media.
F Teamed with this customer profile precision is the ability of mobile phone operators to
use location-based advertising to hit their target audience right at the spot of the first
sales opportunity.
G Combining various elements, such as mobile TV, games, music and the Internet, a mobile
phone is the ideal canvas on which marketers can target consumers with innovative
marketing approaches.
H The first of these is the broad subscriber base that mobile operators often have at their disposal.

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Text 2  13 points
Questions 8–20
Read the article below about covering for business interruption. Choose the correct word or
phrase to fill each gap. There is an example at the beginning, (0).

Covering for business interruption

The purpose of business interruption coverage is to (0) B
the income loss to your business which might result from
storm damage, floods, terrorist attack, hurricane, or any
kind of disaster which has the potential to cause the activity
of your company to grind to a(n) (8) . Of course, risk
managers routinely take out what they believe is appropriate
insurance to cover business interruption, but then usually
think no more about it. Herein lies the danger: a number of
recent cases have demonstrated that, depending upon the
(9) differences in the specific nature of the interruption,
the language of the insurance policy, and the court’s
interpretation of that language, it is possible for companies
to find themselves unexpectedly exposed.
Take this example of two airlines – US Airways and United
Airlines. In September 2001, following the terrorist attacks
on the World Trade Centre (but before the Pentagon was
attacked), the Federal Aviation Administration closed
Reagan National Airport, fearing a similar strike in
Washington. The reason given for the closure was to ‘protect
life and property’, including the property of airline operators
like US Airways and United Airlines. Ultimately, no property
was (10) at the airport, but it remained closed until
October 4, when the aviation watchdog allowed normal
operations to (11) . As a consequence of the closure,
both US Airways and United Airlines lost income. Both
sought insurance coverage for business interruptions, both
were denied coverage, and both ended up in (12) with
their insurers. In the end, one airline received coverage while
the other did not and the (13) results surprised many.
In the case of US Airways, a Virginian state court ruled
that its business interruption losses were covered; however
the federal court in Washington held that United Airlines’
business losses were not. How can these two results be
(14) ? While many believe that federal courts are more
inclined to adopt narrow interpretations of policy language
than state courts, this does not explain what happened
here. The distinction seemed primarily to reside in nuanced
differences in the policy language governing the business
interruption and this is precisely why this story is such a
(15) tale for all risk managers. Both airlines had clauses
in their insurance policies which provided coverage if
access to the insured property was (16) by order of civil
authority. In the case of US Airways, who won their case,
this clause specified that the access should be inhibited
‘as a direct result of a peril insured against’. The appeals
court concluded that the clause did not require actual
damage or loss of property to invoke coverage, but only the
risk of actual damage. Because the order to close Reagan
was issued due to the risk of an imminent attack on the
airport, which included the covered US Airways property,
US Airways was (17) to coverage for its business
interruption losses. By contrast, United Airlines’ clause
stipulated that coverage was provided if (18) to the
insured property were denied as direct result of ‘damage to
adjacent premises’. The appeals court held that the Pentagon
is not ‘adjacent’ to Reagan since the two buildings are three
miles apart and separated by roads and buildings. However,
even if the Pentagon were ‘adjacent’ to the airport, the court
still would have held that United has no right to coverage:
the closure order was issued before the Pentagon was
attacked and not as a consequence of the Pentagon having
been attacked and having suffered damage.
It is worth noting that the coverage provided by one policy
was not necessarily broader than the coverage afforded by
the other. Rather, each policy was (19) by a different type
of event. If you had asked the risk managers at US Airways
and United prior to September 11 if they had (20)
insurance to cover losses from an airport shutdown by an
order of the civil authorities, both probably would have
thought they were covered and neither would have much
basis to prefer the other’s policy over its own. As these case
studies demonstrate, risk managers should not feel content
simply because they have purchased ‘business interruption
coverage’. Not all business interruption coverage is the same,
and different types of businesses are exposed to different
types of risks. When procuring insurance or renewing
coverage, risk managers need to think through the policy
language, ask for policy forms from different companies, and
shop around for the language that best suits their company.

0 A improve B mitigate C enhance D undo

8 A stop B interruption C pause D halt
9 A minute B discreet C subtle D minor
10 A damaged B broken C injured D adjusted
11 A take off B begin C resume D repeat
12 A trial B dispute C argument D litigation
13 A conflicting B disagreeing C warring D fighting
14 A submitted B resigned C resisted D reconciled
15 A safety B cautionary C hazardous D warning
16 A outlawed B prohibited C unaccepted D undesired
17 A allowed B entitled C expected D likely
18 A contact B excess C access D approach
19 A triggered B generated C produced D started
20 A adequate B average C plenty D passable

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Text 3  8 points
Questions 21–28
Read the six extracts below from an article about competition in the US between the different
types of fund-managing organizations in the charity sector and the statements 21–28 on the
next page. Decide which extract (A–F) each statement refers to. You will need to use some of
these letters more than once. There is an example at the beginning, (0).

A D
It would seem to be a contradiction to equate the notion
of charity with the fundamentals of direct competition,
yet charities are obliged to compete in the marketplace
just as much as any other for-profit business. They develop
and market products and services and then struggle to
establish their identity and promote their brands. Above
all, they compete for capital. Charities require an endless
and ever-increasing supply of capital to support their
infrastructure and charitable programmes. Recently, a
particularly fierce battle has been raging in the US in the
not-for-profit sector, the competitors in which are the
three major forms of planned giving: private foundations,
community foundations and commercial donor-advised
funds.
So where does all this leave the community foundations?
Faced with the rapid growth of commercial donor-advised
funds and the powerful appeal of family foundations,
community foundations have been struggling to preserve
their donor base and increase their assets. Many of them
have had recourse to consultants and advisers, resulting
in a retuning of their marketing messages and in them
taking a new competitive stance. And when community
foundations go on the offensive, their target is often the
private foundations. Because they dwarf the community
foundations in both number and amount of total
charitable assets, they represent the largest potential
source of new donors and new assets.

B And it’s a ‘gloves-off’ combat. Community foundation
Private foundations – also known as non-operating or
family foundations – are America’s oldest and more
enduring form of organized philanthropy. There
are currently around 70,000 of these, representing
approximately $425 billion in foundation assets.
Community foundations, of which there are about 700
in the US, representing $38.8 billion in assets, are public
charities which gather and distribute charitable funds
within a specific geographic community. They generate
the majority of their income by means of a donor-advised
fund, which allows donors to set up individual ‘giving
accounts’ that are administered by the charity. The brash
new kids on the block are the ‘commercial’ donor-advised
funds, created by financial institutions. It is they in
particular who appear to be changing the rules and raising
the stakes in the landscape of organized philanthropy.
C pot of charitable dollars is perhaps debatable. Some might
It’s easy to understand why the commercial donor-advised
funds sector has grown so fast in recent years. The notion
of serving the public good while concurrently serving
the interests of shareholders to generate a profit is an
attractive one; moreover, it can be extremely profitable.
Commercial donor-advised funds charge a hefty fee,
generally in the range of 1%–2% of assets, for investment
management and distribution services. The first donor-
advised fund to be created in the US was the Fidelity
Charitable Gift Fund, which was set up by the industry
giant Fidelity in 1991 and now has assets in the region of
$5 billion. Unsurprisingly, philanthropy has since become
a more common component of financial planning. Most
large financial institutions now offer a donor-advised fund
option, the management fees from which have become a
significant source of income.
E
websites routinely expose the ‘shortcomings’ of private
foundations as a basis for considering the ‘logical
alternative’ – a community foundation account. They also
run direct-mail campaigns to private foundations urging
them to transfer their assets to the local community
foundation. The Community Foundations of America,
a special-interest website serving the community
foundations’ community takes an even more aggressive
stand, promoting a series of articles and self-help guides
for use by community foundations that actively promote
the termination of private foundations in favour of a
community foundation account.
F
The extent to which these three types of organizations
– community and family foundations and commercial
donor-advised funds – are direct competitors for the same
argue that each serves a different purpose, and appeals
to a different constituency. The charity sweepstakes is not
a zero-sum game with only one survivor, and should not
be considered as such. However, this appears not to be
the view from the public sector, for which the whole issue
has become not just a fight for ‘commercial’ survival but
a bigger debate about the very nature and purpose of
organized philanthropy.

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0 Commercial donor-advised funds are the most recently created type of charitable
foundation in the US and are changing the way the not-for-profit sector operates. B
21 Some community funds publically criticise the private sector on their websites and in
their publicity material.
22 Some people believe that the private and the public charity sectors cater to different
needs and serve different people, so are therefore not in competition with each other.
23 Some community funds run direct-mail campaigns to try to persuade private
foundations to transfer their assets to the local community foundation.
24 Community funds in the public sector have turned to consultants to help them become
more competitive.
25 Charities have to compete in the marketplace in just the same way as profit-making
organizations do.
26 The first commercial donor-advised fund wasn’t created until 1991, but they have
become an increasingly popular option in large financial institutions.
27 Private donor-advised funds charge a high management fee and are a valuable source
of income for the institutions that manage them.
28 In the face of increased competition, community funds have been finding it more
difficult to retain their base of donors and to increase their assets.

Text 4  12 points
Questions 29–40
Read the article below about the future of the World Trade Organization. For each gap 29–40,
write one word in CAPITAL LETTERS in the answer space. There is an example at the beginning, (0).

Is it time for the WTO to move on?

The self-stated purpose (0) OF the World Trade
Organization has been to develop a fair and legitimate
multilateral trading system, but its message and its values
seem increasingly at odds with the reality of the global
economy at the end of the first decade of the twenty-
first century. Whilst the world is in the midst of a global
financial (29) , brought on by weak regulation
of financial markets, the WTO continues to preach
the gospel of further deregulation of financial services.
Similar deregulation spilled into commodity speculation,
contributing to the food crisis of 2009 with its huge global
imbalances between supply and (30) ; yet the
WTO’s response is to continue to push (31)
accelerated liberalization of developing country agricultural
markets. It seems that it is, indeed, time to clean the house.
The fault lies perhaps not so much with what the WTO
stands (32) as an organization but with
the higher-income nations who have dominated it. It is
these nations – specifically the member states of the US
and the European Union – who have failed to ‘retool’ the
WTO to manage world trade in a manner that could raise
living (33) , decrease poverty, respect the
environment and establish and enforce reasonable rules
for global trade. For (34) , despite strong
economic evidence that a multilateral trading system is
preferable to bilateral and regional trade agreements, the
US and European Union have been guilty of continually
undermining the WTO by strong-arming smaller countries
into bilateral trade deals; and, whilst climate change may
be the biggest threat of the twenty-first century, these same
higher-income nations use the guise of WTO intellectual
property rules to resist enabling the rapid and affordable
transfer of clean technologies to those nations most in need.
Since the breakdown of the Seattle trade talks in 1999, the
growing strength of economies, (35) as South
Africa, Brazil, India and China and the new allegiances
forming between them have made the WTO a much more
legitimate and representative institution for the nations in
the world economy. These developing-country coalitions
have fought for policies that favour developing countries,
granting them ‘special and differentiated treatment’. There
has (36) formal recognition that developing
countries need greater policy flexibility and that high-income
countries need to give more than they demand if the promise
of development is to be achieved. (37) this,
the US and other high-income countries continue to pursue
a hardline policy of commitment to what they perceive
to be their own interests. One of the last acts of the Bush
administration was to reject a developing-country proposal
for a ‘special safeguard mechanism’ which would give
developing country governments the right to raise tariffs
in the event of sudden or large increases in imports that
threaten to undermine food security.
The US and its supporters continue to arm themselves
with projections relating to how wealthier the world might
be if developing countries followed US orders. One of the
latest claims is that the deal proposed by the US at the
latest Doha round of talks could deliver $300bn–$700bn
in global welfare gains, with the benefits ‘well-balanced’
between developed and developing countries. However, not
(38) are such claims highly speculative and
assume far more ambitious outcomes than seem at all likely
at this point, but the coalition of developing countries have
made it clear that they are no longer prepared to accept this
style of bargaining – and so the stalemate continues. For the
WTO to have any kind of future, the high-income nations
need to renew their commitment to the values and ideas on
the basis of which it was originally formed. They need to
commit (39) multilateralism by suspending
the regional and bilateral agreements that undermine it.
Above all, they need to grant the developing world the
policy space to safeguard their vulnerable firms and families
(40) unfair competition. Such moves would
show that the battle of Seattle wasn’t for nothing and would
take the WTO as an organization into the new world order
of the twenty-first century.

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Part 2 Writing
Task 1  10 points
Harmony Homes is a small building company which has been operating successfully for ten
years. It is located on the coast near a popular holiday resort with a growing tourist industry.
The company has decided to diversify into building and operating holiday homes and it plans
to open a small complex of ten holiday chalets in 18 months’ time. Write a marketing plan for
their launch.
Include the following:
• A situation analysis
• Market objectives
• An identification of target market
• A summary of strengths and weaknesses and unique selling points
• Strategies for reaching the market
• A description of how the plan is to be implemented and monitored
Write 150–200 words in the space below.

Task 2  10 points
You are the Deputy Head in a branch of a nursery and childcare franchise called Happy Kids.
Recently, there has been an outbreak of what seems to be mild food poisoning. Ten children
have experienced attacks of vomiting and diarrhoea and two of the eight members of staff have
also been ill. Write a formal email to the parents of all the children at the nursery to inform them
of the outbreak and assure them that the incident is under control.
Include the following:
• Detailed information about the numbers of staff and children affected by sickness
• An explanation of the cause of the sickness
• An outline of the nursery’s commitment to high standards of hygiene
• An explanation of how these standards are maintained
• A description of what extra measures will be taken in future
• A positive and reassuring note to end the email on

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Write 250–300 words in the space below.

Part 3 Listening
Task 1 2:01  5 points
Listen to an extract from an interview with Ari Maas, a specialist in business partnering. For each
question, choose the correct answer, A , B or C. You will hear the recording twice.

1 What does Ari compare his business to?

A Being a guest at a cocktail party where you are trying to find a marriage partner.
B Being the host of a party and introducing the guests to people with the same interests.
C Being the host of a party and trying to find suitable guests to invite.
2 Why, according to Ari, were Nike and Apple® such good business partners?
A Because Nike’s customers are creative and Apple’s customers are interested in sport.
B Because their strategies and products are actually very similar.
C Because they both offer their customers products related to lifestyle management.
3 Why was Apple initially interested in forming a partnership with Nike?
A Because about 50% of their customers also owned Nike products.
B Because about 50% of iPod owners use them when working out at the gym.
C Because over half of their customers who own iPods also work out regularly.
4 What did Nike want to use iPods for?
A To receive running performance data from Nike shoes.
B To enable customers to communicate with each other when running.
C To send data about other athletes anywhere in the world.
5 How have Apple exploited their partnership with Nike to maximum effect on the Internet?
A By selling Nike running gear with iPod pockets.
B By offering iTunes customers music mixes for their personal workouts or playlists from their
favourite sports stars.
C By feeding data into Nike’s website and connecting their customers with other athletes.

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Task 2 2:12  5 points

Listen to an interview with Steve Leach, an expert in risk management for e-businesses.
Complete the notes with two words in each gap. You will hear the recording twice.
Ambush marketing becomes a risk once you have succeeded in developing a successful online
business. Someone else can then pirate your logo, text and image and create their own website
(1) your company.
Cybersquatting can be a problem if you have an established offline business and then decide to start
an online business. You can then find that someone is (2) your reputation by
using a domain name with your brand name.
Hackers are a growing problem. Every year nearly half of UK businesses suffer a malicious
(3) or a breach.
The other kinds of risk which businesses suffer are known as protest issues. Businesses that rely
on the Internet to reach an instant worldwide audience are (4) protests and
rumours of all kinds.
Steve’s company uses sophisticated software and specialist knowledge to locate problems. Once they
have identified an issue, they track the perpetrators and (5) , that is they try to
stop or solve the problem.

Task 3 2:14–2:21  5 points

You will hear eight extracts from interviews about crisis situations. Read the five summaries
below and write the extract 1–8 which it refers to. There are three extracts for which there is no
summary. You will hear the recordings twice.
a) A new product has had very disappointing sales.
b) There’s a strike at the factory.
c) A new medicine has been withdrawn from the market.
d) All the machinery is going to be replaced.
e) There have been allegations of financial misconduct by the company directors.

Task 4 2:35–2:40  5 points

Listen to six extracts from a meeting where a manager is getting people to do things. Read the
statements and mark them T (true) or F (false). You will hear the recordings twice.

1 The company is looking for distribution partners in Vietnam.

2 Jack and Ella are going to carry out a market study for the Japanese market.
3 Soo-Hyang finished the Hong Kong project on time.
4 Henry is worried about a mistake he made.
5 Phil has been trying to do Karen’s job for her.

Part 4 Speaking
Task 1  10 points
Prepare a one-minute presentation on one of these topics. You have one minute to prepare your
talk. You may make notes.

A
Why the brand is crucial
• What is a brand and why is it so important to create one?
• How does a company go about brand-building?

B C
Good practice in crisis management The future of free trade
• Characteristics of good crisis management and common • An overview of the history of
mistakes in bad management of crises free trade up to the present time
• What companies need to do to ensure they have a • What does the future hold for
strategy for crisis management in place free trade and why?

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Task 2  10 points
Work in pairs or threes and discuss one of the two options below.

Option 1 Investment
Your group has been given €1 million to share between you. You are allowed to divide 50%
of this money between each of you to use as you please. The other 50% is to be invested for a
minimum period of ten years, at the end of which you can make a joint decision about what to
do with these funds. Discuss the situation.
• Do you each want to take your share of the 50% or would you rather invest all of it?
• How do you plan to manage your individual share of the money?
• What strategy are you going to adopt for deciding how to invest the other 50%? What level of
risk are you prepared to tolerate? What ethical stance are you going to adopt?
• Who is going to manage the fund and how? How will you monitor its performance and what
measures will you take if you decide its underperforming?
• What do you envisage the state of the fund to be in ten years’ time?

Option 2 Public relations

You are a small team responsible for managing the highly successful boy band ‘Human Zoo’.
The five 19–25-year-old band members are rather immature and have a tendency to behave badly
in public. Recently, they have had a lot of bad press. They caused a lot of damage during a big
party at the Hilton Hotel in London and photographs of the wrecked rooms appeared in all the
major newspapers and online. Yesterday, the lead singer, Rob Azario, caused an uproar when he
swore at a popular TV presenter and stormed out of an interview. He failed to appear on stage at
a concert later that evening, which almost caused a riot among disappointed fans. Many are now
demanding their money back. This morning, local radio stations are threatening to veto ‘Human
Zoo’ on air and you have just received a warning from the sponsors of the band’s upcoming tour
saying that they are considering pulling out.
Discuss the situation and decide what action needs to be taken.
• Decide what steps you need to take to improve the situation a) in the short term and b) in the
long term? What is most urgent and needs to be addressed first?
• What do you need to find out from a) Rob Azario and b) the other band members? How will
you approach them?
• What could you say in a press statement that would be true but not too damaging? What
angle could you take? (You may need to come up with several versions.)
• What steps could you take to try to prevent such incidents happening again in the future?

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