PASSAGE 3 What should companies do to survive 8 May 2021

READING PASSAGE 3
You should spend about 20 minutes on Questions 27-40, which are based on Reading Passage 3 on pages 10 and 11.

What should companies do to survive?

A In the world of business, where today’s fashionable management theory soon becomes a stale cliche or a quaint archaism, it is essential to have a clear idea about the enduring rules of good management. The company that follows these is the company that is in the strongest position amid the uncertainties and violent upheavals of the world as we know it.

B A company is the sum of what its people understand and know how to do well. Value lies increasingly in creative ideas and knowledge. But ideas have value only if people share and develop them in ways that increase revenue; knowledge is useful only if people can find what they need to know. Getting intelligent people to share what is in their heads is vital, and takes more than mere money or clever software. Ideas must flow in every direction through a company-not merely from the top down And knowledge is worth storing only if senior staff set careful rules to filter and structure it. What goes into a database determines the value of what comes out. So setting central rules and standards is key to good knowledge management.

C Good judgement is a key skill. Managers constantly blitzed with new information need to build in the data that matters and set aside the rest. Big-bang decisions are generally best avoided-or implemented in small incremental moves that leave room for flexibility and for altering course, if circumstances change

D Customers matter-but some matter more than others. Acquiring new customers often costs more than making extra sales to existing ones. So companies must build loyalty by providing reliability and good service. Given the welter of product information reaching customers, memorable brands will grow more important. Companies need not only to widen their reach by finding new markets, but also to deepen existing relationships. They have more information than ever before about their customers, and must use this to offer their most profitable customers special deals and to make them feel part of an elite club. Some companies even seek to ‘fire’ unprofitable customers by charging them higher rates than others

E Like its customers, some of a company’s people matter more than others, and not just at the top: managing talent is also about capturing innovative ideas from middle managers and those further down the line. At every level, managers must identify where most value lies. In some cases, a few stars will encapsulate much of a company’s value; in others, teams of employees will matter more. Some companies will want to hire the talents of ‘free agents’ as and when they are required; others, to employ directly their best brains.

F Companies need to collaborate more, in alliances that allow them to outsource production or to spread risk or to enter new markets. Effective collaboration calls for trust and shared understanding, rather than the top-down, command-and-control approach of hierarchical structures. Successful collaboration also requires excellent communication, and incentives that reward sharing information and working for common goals. As costs of handling information in a company decline, new opportunities open for redefining corporate shape, and companies are becoming less hierarchical, with more ways to arrange and rearrange structure. Managers must think through from scratch which activities should be kept in-house and which outsourced, and normally a company should keep those activities it does better than its competitors.

G Given the pace of change, bosses need more than ever to be able to communicate persuasively through many channels, with their staff and the outside world. They must also listen: the most valuable communications will frequently be bottom-up, and the people nearest to the customer are best placed to explain what they see and hear. Managers must listen to them.
H Ironically, internet technologies, cools of freedom and decentralisation, call for discipline and standard processes. Only by setting standards and insisting that everyone abide by them will companies reap their potential savings. Companies need to insist on common practices in areas such as purchasing and information technology in order to harvest real productivity gains. As a result, some aspects of centralisation will increase: a key task of top managers is to provide structures and standards, and to insist that they are observed

I Once standards have been set, openness and freedom should reign. Centralisation of standards makes possible decentralisation of decision making. In addition, internet technologies increase the need for a culture of openness, to foster the sharing of knowledge and effective collaboration. Increasingly, companies will allow their suppliers and customers’inside the machine, ‘as it were, by giving them extraordinary access to their databases and inner workings in order to integrate their operations and to make collaboration effective.

J The key to success lies much less in technical know-how than in excellent leadership to push through and build upon organisational change. At some points in a company’s life, it will need a leader who can rally staff to push through the trauma of disruptive change. At other times, the right style will be the manager-as-coach, a selfless talent scout who specialises in assembling and motivating great teams. Always, the people at the top will set the tone in a firm. Their skills will determine whether it is a good company to work in and do business with.

Questions 27-34
Do the following statements agree with the views of the writer in Reading Passage 3? In boxes 27-34 on your answer sheet, write
YES if the statement agrees with the views of the writer
NO if the statement contradicts the views of the writer
NOT GIVEN if it is impossible to say what the writer thinks about this

27 Too few companies understand how to evaluate fashionable management theories.
28 Certain practices should always be followed when coping with unstable situations
29 It is important that the development of ideas should lead to improvements in the company’s financial position.
30 The structuring of a database should be decided by all its users.
31 More training needs to be provided to help managers assess the usefulness of new information.
32 Any major change should be introduced all at once.
33 Companies can benefit from using different strategies with different customers.
34 The activities which are common to all companies are best kept in-house.

Questions 35-40
Reading Passage 3 has ten paragraphs, A-J
Which paragraph contains the following information?
Write the correct letter, A-J, in boxes 35-40 on your answer sheet.
NB You may use any letter more than once

35 examples of qualities required when co-operating with other companies
36 examples of business activities where all staff should follow the same practices
37 examples of alternative employment patterns within a company
38 a basis for deciding whether a company should carry out an activity itself or ask an outside company to do it
39 an example of how information can be shared by a company and its customers
40 a reason why customers might continue to buy from the same companies