Read the following passages and choose the best answer for each question.
Businesses today operate in a globalized, competitive environment, where they
have to deal with constant change and endless pressures to adapt. Government policies
have to respond to these new business realities. How?
New scientific discoveries, constant restructuring of whole industries, volatility
5 in financial markets, the emergence of the stakeholder society with its demands for more
transparent corporate governance, and the advent of electronic commerce are just some of
the varied challenges facing business and governments.
Globalization is one of the main drivers of change and, at the same time, one of its
principal results. Declining costs for computing, communications and transport
10 undoubtedly underlie globalization’s development, and market liberalization and public
sector reform have also been crucial. Central to globalization is firm-level innovation and
the search for productivity improvements and international competitiveness. It is reflected
in more cross-border operations, higher volumes of trade and foreign investment,
increased collaboration and joint ventures, and ever more sophisticated patterns of
15 production and marketing.
To survive and prosper in this new environment, many firms have had to reorganize and become more responsive to change. They have had to build trust and
responsibility. This has been achieved internally on the one hand, by flattening
hierarchical structures and delegating responsibility in order to mobilize skills more
20 effectively, and externally on the other, by building durable networks as a fundamental
part of maximizing value-added output. The benefits of these networks are evident in the
automotive industry, particularly in component manufacturing and sub-assembly.
Flexibility has become the key word. Smaller units have always predominated in services,
and in manufacturing the average number of employees in work places has been declining
25 in the majority of Organization for Economic Co-operation and Development (OECD)
countries.
One reason for the success of smaller businesses is their ability to adapt rapidly to
new circumstances. Though individually they may experience more turbulence in their
life cycles than larger firms, collectively they are important generators of new jobs. They
30 are also an important conduit of ideas and innovations in the knowledge economy.
The growth of small businesses has led to the emergence of a new market in
knowledge-intensive services including consulting, information technology and research
and development for manufacturing, as firms seek new ways of managing and extending
their strategic resources. Their increasing importance has underlined the fact that
35 intellectual capital—whether in research and development, technological innovation,
managerial and worker training, work-place organization and market knowledge—can
make the difference between success and failure.
1. What best describes the author’s purpose in writing the passage?
a. To state the importance of small and large businesses
b. To point out the drawbacks of globalization and market liberalization
c. To suggest ways to deal with challenges facing businesses and governments
d. To put emphasis on productivity improvements and international
competitiveness
2. What is the best title for the passage?
a. Globalization and market liberalization
b. Challenges facing businesses and governments
c. Productivity improvements and international competitiveness
d. Business and industry policies for knowledge-based economies
3. The word “underlie” (line 10) means _________.
a. maintain
b. reduce
c. cause
d. prevent
4. The word “delegating” (line 19) means __________.
a. giving
b. keeping
c. approving
d. exchanging
5. Paragraph 4 states all of the following about what businesses have done to survive in a new
circumstance EXCEPT that __________.
a. they have reacted more quickly to change.
b. they have had durable networks.
c. they have built trust and responsibility internally and externally.
d. they have hired more employees.
6. According to paragraphs 3 and 4, which of the following statements is true?
a. It is not necessary to have market liberalization and public sector reform.
b. Durable networks are not advantageous for the automotive industry.
c. An increase in the volume of trade and foreign investment reflects globalization’s
development.
d. The number of workers in manufacturing industries in most OECD countries has
risen.
7. The success of small businesses depends on __________.
a. building trust and responsibility
b. their ability to generate new jobs
c. reducing costs for computing and communications
d. their rapid adaptation to new conditions or situations
8. The word “they” (line 29) refers to __________.
a. smaller businesses
b. larger firms
c. life cycles
d. new circumstances Test Form 01 (25001)
9. According to the last paragraph, what can be inferred about knowledge-intensive services?
a. Investment in training and technology is not necessary.
b. They emerge from technological innovation and collaboration.
c. The increasing number of small businesses will promote providers of such services.
d. Success and failure of businesses using the services do not depend on their intellectual capital.
10. The tone of the passage is __________.
a. informative b. exaggerated c. subjective d. supportive