Eclectic Reading - 2
rg Launcher
Contents
. Vocabulary of Business and Economy
. RC based on Business and
=conomy
Number of questions : @
Vocabulary ol Business and Economy'
1. Net income in its most basic delinition re{ers
to a company'stotal earnings, or profit. Simply
put, Nl is the difference calculated when
subtracting expenses f rom revenue.
Earnings per share serve as an indicator ol
a company's profitability. lt is the portion of a
lo
company's profit allocated each
outstanding share of common stock.
The Price-to-Earnings Ratio or PiE ratio is
a ratio for valuing a company that measures
its current share price relative to its per-share
earnings.
4. Valuation: The process of determining the
current worth of an asset or company. There
are many techniques that can be used to
determine value, some are subjective and
others are objective.
Market value is commonly used 10 refer to
the market capitalization ol a publicly-traded
company, and is obtained by multiplying the
number of its outstanding shares by the
current share price. Markel value is easiesl
to determine for exchange{raded instuments
such as stocks.
Protitand Loss Staiement (P&L): Afinancial
statemenl that summarizes the revenues,
costs and expenses incurred during a
specif ied period of time, usually a liscal
quarter or year.
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Current liabilities: A company's debts or
obligations which are due within one year.
Current liabilities appear on the company's
balance sheet and include shod term debt,
accounts payable, accrued liabilities and
other debts.
Current assets: A balance sheet account that
represents the value of all assets that can
reasonably expected to be converted into
cash wilhin one year. Current assets include
cash and cash equivalents, accounts
receivable, inventory, marketable securities,
prepaid expenses and other liquid assets that
can be readily converted lo cash.
Liquidity describes the degree to which an
asset or security can be quickly bought or
sold in the market without affecting the asset's
price.
10. Market liquidity refers to the extent to which
a market, such as a country's stock market
or a city's real estate market, allows assets
to be bought and sold at stable prices. Cash
is the most liquid asset, while real estate,
fine art and collectibles are all relatively illiquid.
Solvency: The ability of a company to meet
its long-term financial obligations, Solvency
is essential to staying in buslness, but a
company also needs liquidity to thrive.
Liquidity is a company's ability to meet its
short{erm obligations. A company that is
insolvent must enter bankruptcy; a company
that lacks liquidity can also be forced to enter
bankruptcy even if it is solvent.
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1
 and venture
investors llke business angels
0 Dividends are payments from a corporation capiialists.
L made to its shareholders
"rJ[.-*.pi"v Franchise agreement : a l?S-1-lTt:1cl
E
t"#,i.l"*iio" profits Dividends are not 24.
L
:;;iiil';;iir;; oPerationar terms and
,*r"" ,",0 in"the"r form of cash: other Iorms
al
such as properties shares' l]"liiil* tranchise business-, r^his
li'r"ir*"rution "i "
or credits can be otfered' i"r"iiu lor"o franchisor and franchlsee
iJJio'n sioirities lease agreements'
'
ir Audit - a physical check performed
by an
intir".ir"r propertv' marketing and
d€ l,Ia]iit ti-'"ttrial on a business' financial
PaYments.
"t
*."iati".r,r"tr rnat eveyhing is accounted
- a percentage used to calculate
Ri for correctly. 25. lnterest rate
amount
sp ir,e clst ot oorrowing money or the
StL 14. Benchmarking - the process of comparing
businesses in your
;;;i ;; ;r;". Ratei varY,trom -?:10::i :i
tne ot
ins
the
iJut nr"in"". io..imilar
industry.
ilil:i s";;iartv tne.nrorrer
[n"1""^, in" nigner t'he interest
rate' Rates
rist<

ate
Break-even point - the exact
point when a -a- ::' r:3 -.: \ a'iable.
15. goods or
lisk
ililelss income equals a business :: rnventory - an 'temized list of
ast
expenses.
:';; ;-. : : -;,'ress is holdins on hand Also
Th€ e:::::{
money or aa
if it lo. Capital - wealth in the form of (lPO)-ltle-:i
schr property owned bY a buslness' 27. lnitial public offering
comDliance - proceduresthat are undertaken
:ffiil;r*i.t'""
..ri ,n". to"ri"o'
- ]1,"^::""*
the general pub,lic'
The 17. **";',i;',,g
the
i*-*,i,,i* interurt" or on an ongoing basis to I'f""'[""*^ f'*'ing on the stock market'
€ laws laid
il.?"'in"t1n" regulations and/orkept' "" with
the €
Jown Oy an autnoritative body are ,A overheads - the {ixed costs associated
marketing'
the Jol-*tlng toutin"ss such as rent
or
econ
18. Consultant - an individual, partnership uiilities ind administrative costs'
of pe J#I*i[n to provide professional lis a
of de ""g"ged
independent and expert advice or
servlces' )q ROI: Stands for'return on investment
(return) of
supp *r', about the benefit
of a "ljni.x,"s into the business'
19. Demographics - the characteristics
g customers'
inl.on", **" gain (net profit)
a"grn"-nt of tn" population e i" L nor, 'nvested
divide the
Unfor
th an an oi ""i.rii
ii"-in"".tt"nt by the cost of the
20. Deoreciation - the process of expensing inu".ir"n, - the Rol is expressed as
a
classi
;#i;;;t a Period of time An asset is
ratio
of oth to spread the cost of the asset Percentage or a
i"pi""i"t"o Ent:rpri:e)--,:::
large (
over its useful life. 30. SME (Smatl to Medium
used to reler to micro-
paradr
- is a #;'sME ii
soldiel 21. Double-entrY bookkeePing each L"r.in".t"", small businesses and medium
come ["-"rrl1pi"s hethod that records sized firms.
suits., t;;;";1." iri two accounts both as a debit
comes and a credit. 31. Unique selling position - a characteristic
Jiuir"i""tt t'u product/seruice that sets
no id(
Entrepreneur: Generally this term is
used
conver grows a it apad from the comPetition'
lo Jescrioe a person who starts and starl-
unique or innovative business
operation' a, venture Capital ' capital invested in a
excellent
S
t(
to a
,l ou.in"." tnut it thought to have

23. Eouitv finance - is money provided ilo*th o,otp""t" but does not have access sl

ir'JnZ." in for part ownership of

io-."piiur markets because it is a private tv
"*"n,nge
ir,l-Lusin"ss. t,i" cin be money invested by m
company
in" jr.in""" owners, friends' family'
or
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 I ;lale ne nt
l::i: : -'-a' zat O'] S ffa
,:.-. -: :€r 1al - ihe cash available to a
: --t :: i' :i.-ro-dayexpenses.
:, ----:,.,-s 'or questions 1 to 19: Read the lollowing
: :: i.::; ::'eiully and answer the questions that
.--,
Passage - | Cumming, head of UK equities at Standard Life, a
ls it time for Vodafone, the world's biggest mobile
operator, to overhaul its strategy? The idea is not
new, but it has recently become the subject of much
debate. Sir John Bond, a banker who will take over
as Vodafone's chairman in July, has been doing the
rounds of institutional shareholders, many of whom
have expressed disquiet about the gianl firm's
direclion.
Some investors have called ior Vodafone to sell its
45% stake in Verizon Wireless, a big American
mobile ocerator, which is wodh around t25 billion
($45 blllion there are also concerns about continuing
):
problems at the firm's Japanese unit. Vodafone has
continued to pursue ils unique approach ol being a
mobile-only operatorwith unrivalled global scale. Bul
both pillars of this once-visionary strategy are now
being called into question.
"Vodafone has consistently overpromised and under
delivered on its 'bigger is better' strategy," complains
John Karidis, an analyst at lvlan Securities. Vodafone
has ong insisted that its size provides huge
economies of scale when buying handsets, network
equipment and software. But while nearly all of
Vodafone s regional operations use the same
iechnology, called GSN4, there are two big
exceptions: its American and Japanese units.
./erizon Wireless uses a different, incompatible
'eless technology called CDMA, so there is little
i : : :: 'aT economies ol scale. Vodafone's attempt
-:: :-a same handsets worldwide was a
.::'.-'.: - -.''2 :re in Japan, a unique market that is
' , -.:: =1's ahead of Europe in its adoption ol
.
-:: i'::--::;- Crlywhen Vodafone relented and
aECt lv.s*
launched a new range of Japan-specific handsets
n was it able to halt an exodus of subscribers. ln the
process, it undermined its own argument about
economies ol scale. And with three new operators
due to launch services later this year, the Japanese
market is about lo become far more competitive.
As a result, it could make sense for Vodafone to
scale back its global ambitions. 'The market has
lost confidence in the group's ability to deliver value
by pursuing their current global strategy," David
big institutional investor in Vodafone, said this week.
Mr Karidis says he would like to see a reversal of
the expansionist strategy and more focus on
execution. The company's latest trading update,
released this week, was a mixed bag, with higher-
than-expected subscriber growth, but declines in
average revenue per user, a widely used industry
measure, in Britain, Germany, ltaly and Japan. The
stronger pedormance of 02 says Mr Karidis, shows
that scale is less important than "razor-sharp
operating focus".
The second pillar of Voda{one's strategy, its mobile-
only approach, also looks wobbly. Around the world,
telecoms operalors are starting to integrate theirfixed
and mobile networks, offering special deals to
customers who buy both services together. Beyond
that, many operators are also gearing up to offer
"quadruple play" bundles ol fixed and mobile
telephony, broadband and television services. lf such
"converged" bundles prove popular, Vodafone's
mobile-only strategy will leave it isolated.
Needless to say, Arun Sarin, Vodafone's chief
executive, disagrees with the critlcs. "There is an
advantage to scale," he insists, "and we are happy
with occupying the mobility space." But he is also,
he admits, prepared to be "flexible and pragmatic"
about Vodafone's strategy. lndeed, there are some
signs of an impending shift.
Mr Sarin notes that both the American and Japanese
units are worth more today than they were a year
ago. Vodafone's board regularly reviews whether to
keep them in the company's portfolio, and has so
far decided to do so-though that could change in
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future. "What we have to do is keep these assets in
the fold until there is clear visibility of value that we
can take home to our shareholders", he says. ln other
words, he just seems to be waiting for the right time
to sell.
He disagrees that Vodafone has concentrated on
expansion atthe expense o{ execution. 02 has been
run with more of a short-term strategy, to attract a
buyer, he says. And Vodafone's operations in
Romania and the Czech Republic were swiftly
integrated into the group and are now pedorming
better than expected. But Mr.Sarin has signaled the
end of his buying spree; he would like to increase
Voda{one's stake in Polkomtel, a Polish operator,
he says, but does not have anything else on his
shopping list at the moment.
What of the suggestion that Vodafone's mobile-only
strategy will be undermined by convergence? 'lt's
very early days," says Mr Sarin. 'We are dubious
whether customers really want all the things that
people are imagining that 'they want." Already, he
notes, Voda{one sometimes provides {ixed/mobile
bundles to big corporate customers, by buying
capacity from lixed-line operators. The company is
also acting as a wireless partnerto BT, Britain's fixed-
line incumbent, which lacks a mobile network, and
may strike similar deals in llaly and Japan. America's
Verizon, which owns the other 55% of Verizon
Wreless, plans to offer converged services too.
'I . How does the instance of the Japanese market
question Vodafone's argument for "economies
of scale"?
(1) lt had to create a special range ol phones
which did not save costs considering the
market was limited to one country.
(2) lt had to create a special range of phones
for which it had to buy R & D from
universities at a huge cost.
(3) lt lost a lot of time trying to evolve these
special handsets and by then the
competition had already captured the
market.
(4) lt had to lose its lead in the Asian market
as a result of concentrating all efforts on
creating a special handset for Japan.
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(5) lt was able to half an exodus of
subscribers due toJapan's unique market.
What is the biggest problem that lhe author
foresees with Vodafone's "mobile only"
strategy?
(1) lt is flawed because in many pans ot the
world the mobile is becoming redundant.
(2) Mobile companies are bundling their
offerings and this is the way of the future.
(3) The world is shrinking and people are
choosing lo use the lnternet more than
the cellphone.
(4) Developing markets are not so open to a
"mobile only" company.
(5) Broad band services are preferred over
mobiles.
It can be infened that ttle author thinks Sarin's
comment about waiting. in case ol the
American and Japanese markets' value to
rise, is
(1) a long term strategy that might make a
profit for Vodafone.
(2) a long term strategy that is not based on
adequate research.
(3) based on prejudices against these
markets and this might be a problem.
(4) not a long term strategy.
(5) a strategy based on intuition rather than
business logic.
When it comes to the idea of convergence'
Vodafone believes
(1) the idea is ahead ol its time and will be a
reality in the next decade.
(2) it is not clearwhether customers preler it
or not.
(3) it is unclear whether companies can
benefit from it.
(4) it is a matter of time belore companies
around the world adopt it.
(O it is already providing the service in
differentways.
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Passage - ll
Becently I spent several hours sitting under a tree in
my garden with the social anthropologist William
Ury a Harvard University professor who specializes
in the art of negotiation and wrote the bestselling
book, Getting ,o yes. He captivated me with his
theory that tribalism protects people from their fear
of rapid change. He explained thai the pillars of
tribalism that humans rely on for security would
always counter any significant cultural or social
change. ln this way, he said, change is never allowed
to happen too fasl. Technology, for example, is a
pillar of society. Ury believes that every time
technology moves in a new or radical direction,
another pillar such as religion oi nationalism will grow
stronger - in effect, the traditional and familiar will
assume greater importance to compensate for the
new and untested. ln this manner, human tribes avoid
rapid change that leaves people insecure and
Irightened.
But we have all heard that nothing is as permanent
as change. Nothing is guaranteed. Pithy
expressions, to be sure, but no more than cliches.
As Ury says, people don't live that way from day{o-
day. On the contrary, they actively seek cenainty
and stability. They want to know they will be sate.
Even so, we scare ourselves constantly with the idea
of change. An IBM CEO once said: 'We only re-
slructure for a good reason, and if we haven't re-
structured in a while, that's a good reason.' We are
scared that competitors, technology and the
consumer will put us out of business so we have to
change all the time just to stay alive. But if we asked
our fathers and grandfathers, would they have said
that they lived in a period of little change? Structure
may not have changed much. lt may just be the
speed with which we do things.
1. Change is over-rated anyway. Consider the
automobile, lt's an especially valuable example,
because the auto industry has spent tens of billions
or dollars on research and product development in
the Iast 100 years. Henry Ford's first car had a metal
chassis with an internal combustion, gasoline-
powered engine, four wheels wi:th rubber tyres, a
foot operated clutch assembly and brake system, a
steering wheel, and four seats, and it could salely
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do miles per hour. A hundred years and tens of
thousands of research hours later, we drive cars with
a metal chassis with an internal combustion,
gasoline-powered engine, four wheels with rubber
tyres, a foot operated clutch assembly and brake
system, a steering wheel, four seats - and the
average speed in London in 2001 was 17.5 miles
per hour!
That's not a hell of a lot ol return for the money. Ford
evidently doesn't have much to teach us about
change. The fact thatthey're still manufacturing cars
is not proof that Ford Motor Co. is a sound
organization, just prool lhat it takes very large
companies to make cars in great quantities - making
for an almost impregnable entry barrier
Fifty years after the development of the jet engine,
planes are also little changed. They've grown bigger,
wider and can carry more people. But those are
incremental, largely cosmetic changes.
Taken logether, this lack of real change has come
to mean that in travel - whether driving or flying
-
time and technology have not combined to make
things much better. The safety and design have of
course accompanied the times and the new volume
of cars and flights, but nothing of any significance
has changed in the basic assumptions of the final
produci.
At the same trme, moving around in cars or
aeroplanes becomes less and less efficient all the
time. Not only has there been no great change, but
also both forms or transport have deteriorated as
more people clamour to use them. The same is true
for telephones, which took over hundred years to
become mobile, or photographic film, which also
required an entire century to change.
The only explanation forthis is anthropological. Once
established in calcified organizations, humans do
two things: sabotage changes that might render
people dispensable, and ensure industry-wide
emulation. ln the 1960s, German auto companies
developed plans to scrap the entire combustion
engine for an electrical design. (The same existed
in the '1970s in Japan, and in the 1980s in France.).
So for 40 years we might have been free of the
MBA Page 5
 wasleful and ludjcrous dependence on fossil fuels.
Why didn't it go anywhere? Because auto executives
understood pistons and carburettors, and would loath
to cannibalize their expertise, along with most of their
factories.
5. According to the passage, which of the
following statements is true?
(1) Executives ol automobile companies are
inefficient and ludicrous.
(2) The speed atwhich an automobile is driven
in a city has not changed much in a
century
(3) Anthropological factors have fostered
innovation in automobiles by promoting use
o, new technologies.
(4) Further innovation in jet engines has been
more than incrementa..
. 6. Which of the following views does the author
fuliy support in the passage?
(1) Nothing is as permanent as change.
(2) Change is always rapid.
(3) More money spent on innovation leadsto
more rapid change.
(4) Over decades, structural change has been
incremental.
7. Which of the following best describes one of
the main ideas discussed in the passage?
(1) Rapid change is usually welcomed in
society.
(2) lndustry is not as innovative as it is made
out to be.
(3) We should have less change than what
we have now.
(4) Competition spurs companies into radical
lnnovaiion.
Passage - lll
Crinoline and croquet are out. As yet, no political
activists have thrown themselves in lront of the royal
horse on Derby Day_ Even so, some historiahs cln
spot the parallels. lt is a time of rapid technological
change. lt is a period when the dominance oithe
world's superpower is coming under threat. lt is an
epoch when prosperity masks underlying economic
strain. And, crucially, it is a time when policy-makers
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are confident that all is for the best in the best of all
possible worlds. Welcome to the Edwardian Summdr
of the second age of globalisation.
Spare a moment to take stock of what's been
happening in the past few months. Let's stan with
the oil price, which has rocketed to more than g65 a
barrel, more than double its level 18 months ago.
The accepted wisdom is that we shouldn't worry our
little heads about that. because the incentives are
there for business to build new production and
refining capacity, which will effodlessly bring demand
and supply back into balance and bring crude prices
back to $25 a barrel. As Tommy Copper used to
say, 'just like that'.
Then there is the result of the French referendum on
the European Constitution, seen as thick-headed
Iuddites railing vainly against the modern wodd. What
the French needed to realize, the argument went,
was that there was no alternative to the reforms that
would make the country more flexible, more
competitive, more dynamic. Just the sort of reforms
that allowed Gate Gourmet to sack hundreds of its
staff at Heathrow after the sort of ultimatum that
used to be handed out by Victorian mill owners. An
alternative way of looking at the French ,,non', is
that our neighbours translate',llexibility', as,,you,re
fired".
Finally, take a squint at the United States. Just like
Britian a century ago, a period of unquesiioned
superiority is drawing to a close. China is still a
long way from matching America,s wealth, but it is
growing ata stupendous rate and economic strength
brings geo-political clout. Already, there is evidence
of a new scramble for Africa as Washington and
Beijing compete for oil stocks. Moreover, beneath
the surface of the US economy, all is not well. Growth
Iooks healthy enough, but the competition from China
and elsewhere has meant the world's biggest
economy now imports far more than it exports. The
US is living beyond its means, but in this time of
studied complacency a current account deficit wodh
6 percent of gross domestic product is seen as a
sign of strength, not weakness.
ln this new Edwardian summer, comfod is taken
from the fact that dearer ojl has not had the savage
inflationary consequences of i973-1974, when a
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fourfold increase in the cost ol crude brought an
abrupt end to a postwar boom that had gone on
uninterrupted for a quarter oi a century. True, the
cost of living has been affected by higher transpod
costs, but we are talking of inflation at 2.3 per cent
and not 27 percent. Yet the idea that higher oil prices
I
are of little consequence is fanciiul. ll people are
paying more to fill up their cars it leaves them with
I less to spend on eveMhing else, but there is a
reluctance to consume less. ln the 1970s unions
were strong and able to negotiate large,
compensatory pay deals that served to intensify
inflationary pressure. ln 2005, that avenue is pretty
much closed off, but the abolition of all the controls
on credit that existed in the 1970s means that
households are invited to borrow more ralher than
consllme less. The knock-on effects of higher oil
prices are thus felt in different ways - through high
levels of indebtedness, in inflated asset prices, and
in balance of payments deficits.
There are those who point out, rightly, that modern
industrial capilalism has proved mightily resilient
these past 250 years,.and that a sign of the enduring
strength oflhe system has been the way it apparently
shrugged off everything - a stock market crash,
9/11, rising oil prices - that has been thrown at it in
the half decade since the millennium. Even so, there
are at least three reasons for concern. First, we have
been here before. ln terms of political economy, the
first era ol globalisation mirrored our own. There was
a belief in unfettered capital flows, in free migration.
Eventually, though, there was a backlash, manifested
in a struggle between free traders and protectionists,
and in rising labour militancy.
Second, the world is traditionally at its most fragile
at times when the global balance of power is in flux.
By the end of the nineteenth century, Britain's role
as the hegemonic power was being challenged by
the rise of the United States, Germany, and Japan
while the Ottoman and Hapsburg empires were
i clearly in rapid decline. Looking ahead lrom 2005, it
/ is clear that over the next two or three decades,
bolh China and lndia-which togetheraccount for half
the world's population - will flex their muscles.
Finally, there is the question of what rising oil prices
tell us. The emergence of China and lndia means
global demand for crude is to remain
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!l!l ::: :: :: : :: :=
time when experts say production is about to top
out. lf supply constraints stad to biie, any decline in
the prices are likely to be short-term cyclical affairs
punctuating a long upward trend.
8. By the expression 'Edwardian Summer', the
author refers to a period in which there is
(1) unparalleled luxury and opulence.
(2) a sense of complacency among people
because of all-round prosperity.
(3) a culmination of all-round economic
prosperity-
(4) an imminent danger lurking behind
economic prosperity.
9. What, according to the author, has resulted
in a widespread belief in the resilence of
modern capitalism?
(1) Growth in the economies of Western
countries despite shocks in the form of
increase in levels of indebtedness and
. inflated asset prices.
(2) lncrease in the prosperity of Western
countries and China despite r;sing oil
prices.
(3) Continued growth of Western economies
despite a rise in terrorism, an increase in
oil prices and other similar shocks.
(4) The success of continued reforms aimed
at making Western economies more
dynamic, competitive and eff icient.
10. Which of the following best represents the
key argument made by the author?
(1) The rise in oil prices, the flux in the global
balance of power and historical
precedents should make us question our
belief that the global economic prosperity
would continue.
(2) The belief that modem industrial capitalism
is highly resilient and capable of
overcoming shocks will be belied soon.
' (3) Widespread prosperity leads to neglect
of early signs of underlying economic
weakness, manifested in higher oil prices
and a flux in the global balance of power.
(4) A crisis is imminent in the West given the
growth of countries like China and lndia
and the increase in oil prices.
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11. What can be inferred about the author's view
when he states 'As Tommy Cooper used to
say "just like that"?
(1) lndustry has incentives to build new
production and refining capacity and
therefore oil prices would reduce.
(2) There would be a correction in the price
levels of oil once new production capacity
is added.
(3) The decline in oil prices islikelyto be short-
term in nature.
(4) lt is not necessary that oil prices would
go down to earlier levels.
Passage - lV
Demography of organisations, also called population
ecology is an interesting field. lt proposes that
organisational mortality processes depend upon the
age and size of the organisation, as well as on
characteristics of populations and environments.
Moreover, there is evidence ol an imprinting process
-meaning that environmental conditions at certain
early phases in an organisation's development have
longterm consequences. ln particular, organisations
subjectto intense competition have elevaled mortality
hazards at all ages. A cenlral theme is structural
inertia, the tendency for organisations to respond
slowly relative to the speed of environmental change.
A central argument hotds that the inertia derives from
the very characleristics lhat make organizations
favoured actors in modern society in terms of reliability
and (formal) accountability. It follows thai changes
in an organisation's core features are disruptive and
in-crease monality hazards, at least in the short-
run. Research on this subject tends to support this
view The concept o{ niche provides a framework for
relating environmental variations and competition to
'populations in terms of dimensions of social, political,
and economic environments. Most research in this
field builds on theories of resource partition and of
density dependence. Resource-partitioning theory
concerns the relationship between increasing market
concentralion and increasing prolileration of
specialists in mature industries. The key implication
of this theory concerns lhe effects of concentration
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avcLIMBS
on the viability of specialist organisations (those that
seek to exploit a narrow range oi resources). The
theory of density-dependent organisational evolution
synthesizes ecological and institutional processes.
It holds that growth in the number ol organisations
in a population (density) drives processes of social
legitimatization and competition that, in turn, shape
the vital rates.
12. Consider the following: "Tata Steel, one of
biggest steel makers in the world, was born
in Jamshedpur."
lf above passage is true, then it can be
concluded that location of Tata Steelhas been
one of the reasons for its success.
1. The conclusion is false.
2. This is a larfetched conclusion.
3 This is a valid conclusion.
(1) 1 only (2\ 2 only
(3) 3 only (4) 1 and 2
(5) 2 and 3
13. Most top-notch business consultants
recommend changing the entire configuration
of an organisation's strategy, structure and
systems. lf the ideas contained in the
passage are agreed to, then such a
recommendation:
(1) tends to rejuvenate the organization.
(2) tends to make the organisation more
aligned to the external environment.
(3) tends to increase the competitiveness ol
the organisation by redefining its core
competence.
(4) tends to increase the vulnerability of the
organisation.
(5) tends to make the organisation industry
, leader by re{ormulating its niche.
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14. Becently it was reported thal lndian textile
seclor was not doing well. lf the ideas
contained in the passage are agreed to, then
which of the following could be the possible
reason(s)?
1. All lndian {irms are as old as international
firms.
2. lndian textile {irms are dispersed all over
the country, with most ofthem also having
international presence.
3. Textile firms in lndia were subjected to
trade union activity in the period from the
.1980s.
1 960s to the
(1) 1 only (2\ 2 onty
(3) 3 only (4) 1 and 2
(5) 2 and 3
t5. "Tala steel, one of biggest steel makers in
the world, was born in Jamshedpur. The very
success ol Tata Steel could lead to its failure
in future and hence the challenge for Tata
Steel is to recognize its strenglhs that made
it successful in initial conditions and stick to
them."
1. This is a valid conclusion.
2. The conclusion is contrary to the ideas
described in the passage.
3. The conclusion is internally contradictory.
(1)1only (2\ 2 onty
(3) 3 only (4\ 1 and 2
(5) 2 and 3
Passage - V
lf translated into English, most of the ways
economists talk among themselves would sound
plausible enough to poets, journalists,
businesspeople, and other thoughtful though non-
economical folk. Like serious talk anywhere
among boat designers and baseball {ans, say
- accomplishihg things with language: inciting a mob
-
the talk is hard to follow when one has not made a
habil of listening to it for a while, The culture of the
conversation makes lhe words arcane. Bul the
people in the unfamiliar conversation are not
Martians. Underneath it all (the economist's favourite
phrase) conversational habits are similar. Economics
uses mathematical models and statistical tests and
market arguments, all of which look alien to the
literary eye. But looked at closely they are not so
alien. They may be seen as figures of speech-
metaphors, analogies, and appeals to authoriry
Figures of speech are not mere frills. They think for
us. Someone who thinks of a market as an 'invisible
hand' and the organization of work as a 'production
function'and his coefficients as being 'significant',
as an economist does, is giving the language a lot
ol responsibility. lt seems a good idea to look hard
at his language.
ll the economic conversation were {ound lo depend
a lot on its verbal forms, this would not mean that
economics would be not a science, or just a matter
of opinion, or some sort of confidence game. Good
poets, though not scientists, are serious thinkers
about symbols; good hrstorians, though not
sbientists, are serious thinkers about data. Good
scientists also use language. What is more (though
it remains to be shown) they use the cunning of
language, without particularly meaning to. The
language used is a social object, and using language
is a social act. lt requires cunning (or, if you prefer,
conslderation), attention to the other minds present
when one speaks.
The paying ot attention to one s audience is called
'rhetoric', a word that I later exercise hard. One uses
rhetoric, of course, to warn of a fire in a theatre or to
arouse the xenophobia of the electorate. This sort of
yelling is the vulgar meaning of the word, like the
president's 'healed rhetoric'in a press conference
or the 'mere rhetoric' to which our enemies stoop.
Since the Greek flame was lit, though, the word has
been used also in a broader and more amiable
sense, to mean the study of all the ways of
to lynch the accused,lo be sure, but also persuading
readers of a novel that its characiers breathe, or
bringing scholars to accept the better argument and
reject the worse.

vA.- 13
alcrlMs.* Page 9
The question is whether the scholar who usually According to the passage, which of the
fancies himself an announcer of 'results' or a stater following is the best set of reasons forwhich
of'conclusions' free of rhetoric- speaks rhetorically. one needs to 'look hard' at an economist's
Does he try to persuade? lt would seem so. language?
Language, ljust said, is not a solitary A. Economists accomplish a great deal
accomplishment. The scholar doesn't speak into the through their Ianguage.
void, or to himself. He speaks to a community of B. Economics is an opinion-based subject.
voices. He desires to be heeded, praised, published, C. Economics has a great impact on otheas
imitated, honoured, en-Nobeled. These are the lives.
desires. The devices of language are the means. D. Economics is damaging.
(1) A and B (2) C and D
Rhetoric is the proportioning ol means to desires in
(3) AandC (4) B and D
speech. Rhetoric is an economics of language, the
study of how scarce means are allocated to the 17. ln the light of the definition of rhetoric given in
insatiable desires of people to be heard. lt seems on the passage, which of the following will have
thejae,eotit a reasonable hypothesis that economists the least element of rhetoric?
aie like other people in being talkers, who desire (1) An election speech
listeners whey they go to the library orthe laboratory (2) An advertisement jingle
as much as when they go to the office or the polls. (3) Dialogues in a play
The purpose here is to see if this is true, and to see (4) Commands given by army officers
if it is useful: to study the rhetoric of economic
scholarship. 18. As used in the passage, which of the
following is the closest meaning of the
The subject is scholarship. lt is not the economy, or statement 'The culture of the conversation
the adequacy of economic theory as a description o.f makes the words arcane'?
the economy, or even mainly the economist's role in (1) Economists belong to a different culture.
the economy. The subject is the conversation (2) Only mathematicians can understand
economists have among themselves, for purposes economists.
of persuading each other that the interest elasticity (3) Economists tend to use terms unfamiliar
of demand for investment is zero or that the money to the lay person, but depend on lamiliar
supply is controlled by the Federal Reserve. linguistic forms.
(4) Economists use similes and adjectives
Unfonunately, though, the conclusions are of more in their analysis.
than academic interest. The conversations of
'19.
classicists or of astronomers rarely affect the lives As used in the passage, which of the
of other people. Those of economists do so on a following is lhe closest alternative to the word
large scale. A well known joke describes a NIay Day 'arcane'?
parade through Red Square with the usual mass of (1) l\ilysterious (2) Secret
soldiers, guided missiles, rocket launchers. At last (3) Covert (4) Perfidious
come rank upon rank of people in gray business
suits. A bystander asks, "Who are those?" "Ahal"
comes the reply, "Those are economists: you have
no idea what damage they can do!" Their
conversalions do it.

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