Writing

Text 3

As you read the text, write a short heading for each paragraph.

Market Leaders, Challengers and Followers

In most markets there is a definite market leader: the firm with the largest market share. This is often the first company to have entered the field, or at least the first to have succeeded in it. The market leader is frequently able to lead other firms in the introduction of new products, in price changes, in the level or intensity of promotions, and so on.

Market leaders usually want to increase their market share even further, or at least to protect their current market share. One way to do this is to try to find ways to increase the size of the entire market. Contrary to a common belief, wholly dominating a market, or having a monopoly, is seldom an advantage: competitors expand markets and find new uses and users for products, which enriches everyone in the field, but the market leader more than its competitors. A market can also be expanded by stimulating more usage: for example, many households no longer have only one radio or cassette player, but perhaps one in each room, one in the car, plus a Walkman or two.

In many markets, there is often also a distinct market challenger, with the second-largest market share. In the car hire business, the challenger actually advertises this fact: for many years Avis used the slogan “We're number two. We try harder.” Market challengers can either attempt to attack the leader, or to increase their market share by attacking various market followers.

The majority of companies in any industry are merely market followers which present no threat to the leader. Many market followers concentrate on market segmentation: finding a profitable niche in the market that is not satisfied by other goods or services, and that offers growth potential or gives the company a differential advantage because of its specific competencies.

A market follower which does not establish its own niche is in a vulnerable position: if its product does not have a “unique selling proposition” there is no reason for anyone to buy it. In fact, in most established industries, there is only room for two or three major companies: think of soft drinks, soap and washing powders, jeans, sports shoes, and so on. Although small companies are generally flexible, and can quickly respond to market conditions, their narrow range of customers causes problematic fluctuations in turnover and profit. Furthermore, they are vulnerable in a recession when, largely for psychological reasons, distributors, retailers and customers all prefer to buy from big, well-known suppliers.

Ex. 1. Find words in the text which mean the following.

1) a company's sales expressed as a percentage of the total market;

2) short-term tactics designed to stimulate stronger sales of a product;

3) the situation in which there is only one seller of a product;

4) companies offering similar goods or services to the same set of customers;

5) a short and easily memorized phrase used in advertising;

6) the division of a market into submarkets according to the needs or buying habits of different groups of potential customers;

7) a small and specific market segment;

8) a factor which makes you superior to competitors in a certain respect;

9) a business's total sales revenue;

10) a period during which an economy is working below its potential.

Ex. 2. Which of the following three paragraphs most accurately summarizes the text, and what is wrong with the others?

First summary:

In most markets there is a definite market leader, with the largest market share, which frequently helps other firms to introduce new products. In many cases, there is also a market challenger, which wants to replace the leader, and various market followers, which seek out particular niches that do not interest the leader. Other followers merely imitate the products of larger companies, but this is a dangerous strategy during recessions.

Second summary:

In most markets there is a leader that strongly influences other firms in the introduction of new products, price changes, promotions, and so on. There is frequently also a market challenger, with the second-largest market share, which can attempt to increase its market share by attacking either the leader or some market followers. Market followers concentrate on profitable niche products that are in some way differentiated from the products of larger companies.

Third summary:

The first company in a particular market nearly always becomes the market leader, a position it will try to keep by regularly attacking distinct market challengers and followers. Most followers can either concentrate on small market segments or niches, or follow the safer strategy of imitating the leader’s products.

Rearrange the following sentences and part-sentences to make up a short text about market concentration in writing. Follow the following guidelines:

– Begin with a paragraph containing arguments both against and in favour of monopoly.

– Continue with a paragraph defending or justifying market concentration.

– End with a paragraph arguing that monopolies are always short-lived, and so not a problem.

A. According to this position, the government only needs to ensure that there is no monopoly over important inputs, because there will never be a monopoly of scientific or artistic genius or business ideas.

В. According to this view, market concentration arises naturally from a few successful firms growing larger as a result of increased efficiency, innovation, and economies of scale in production, distribution, R&D, capital financing, and so on.

С. A counter argument is that erecting barriers – for example, by process innovation, product differentiation, persuasive advertising, or pricing policy – in order to be successful and to make competitors less successful, is a normal part of rivalry and competition.

D. Although some people argue that any barrier to competition will inevitably lead to inefficiency.

E. An example here would be telecommunications.

F. and businesses facing no competition have no incentive to find ways to reduce costs.

G. Even the profits made by a natural monopoly will be temporary, because they are an incentive for entrepreneurs to discover and implement new low-cost technologies.

H. For example, although entrepreneurs introduce new products and techniques and open up new markets, their profits are soon competed away by rivals.

I. it is right that inventors should be granted a temporary monopoly as a reward for innovation or discovery.

J. monopolists are always able to make excessive profits.

К Some people even argue that monopolies are always temporary and consequently not a problem.

L. The arguments against market concentration, or at least against monopoly, are obvious…

M. The only common argument in favour of monopoly concerns patents…

TRANSLATION

A. Translate from English into Russian.

Market

No matter how independent we may be in spirit, virtually none of us is self-sufficient. Our mutual interdependence for goods and services is a fact of life. We rely on others to satisfy our most basic needs. There is an incredibly complex division of labour and specialization in economic activities. Specialized firms and agencies make particular goods and services available to: consumers, investors and governments. Workers specialize in particular trades and occupations and this makes economic interdependence inevitable. The most common way we obtain goods and services is to buy them from others who specialize in producing them. To make such purchases, buyers seek out sellers in markets.

A market is an arrangement through which buyers and sellers meet or communicate for the purpose of trading goods or services. Markets are a way in which buyers and sellers can conduct transactions resulting in mutual net gains that otherwise wouldn't be possible. Many market transactions are conducted without buyers and sellers actually meeting at a particular location. For example, you can browse through catalogues or magazine advertisements to see what various sellers are offering. If you find something you like, you can order it by mail or telephone, without face-to-face contact with the seller. You can also hire an intermediary to carry out a transaction for you.

The purpose of a market is to make information available on the goods and services sellers are willing to sell and buyers want to purchase. This exchange of information is the basis for determining prices which in turn influence the actual amount of goods and services exchanged. Prices are a major determinant of the choices we make as both buyers and sellers. Market prices play a vital role in coping with the problem of scarcity because they ration available amounts of goods and services.

To analyze the way markets operate, we first must understand the concept of supply and demand. Supply and demand analysis explains how prices are established in markets through competition among buyers and sellers and how those prices affect quantities traded.

B. Translate from Russian into English.

1. Японские товары имеют репутацию высококачественных.

2. Главная забота отечественных производителей – повышение качества изделий.

3. Производитель гарантирует доставку товара в любую часть страны.

4. Внешний вид изделия имеет большое значение для его конкурентоспособности.

5. Изучение рынка очень важно для успеха в бизнесе.

6. Начиная новое дело, необходимо провести тщательное изучение рынка сбыта товаров и услуг.

7. Многие покупатели оценивают качество товара по его надежности и долговечности.

LISTENING

Listen to Kate Barker, an economist, talking about the causes of the business cycle.

Ex. 1. Answer the following questions.

1. When Kate Barker talks about the level of companies' investments, does she mean:

a) their financial reserves (deposited in a bank, or invested in treasury bonds, shares in other companies, and so on) or

b) the money they spend on their plant (i.e. factories, and the machines and equipment inside them)?

2. When she talks about the level of companies' stocks, does she mean:

a) their inventories of unsold goods, or

b) the current price of their shares at the stock exchange?

3. According to Kate Barker, what do companies tend to do:

a) when demand is very strong, and

b) when demand weakens a little?

4. According to the standard theory, when will companies begin to invest again after a downturn, and why?

5. What was the external or exogenous shock that caused the downturns in both the early 1970s and the early 1980s?

6. What were the two factors which led many European business people to invest too much in the late 1980s?

7. What was the exogenous shock that caused the downturn in the early 1990s?

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