Subject for study: Industry and market. Working on the text.

Ex.1. Read and translate the text paying particular attention to the words in italics. Use a dictionary if necessary.

Industry and Market Structures. Part 1.

Industry and market structures sometimes last for many, many years and seem completely stable. The world aluminum industry, for instance, after one century is still led by the Pittsburgh-based Alu­minum Company of America which held the original patents, and by its Canadian offspring, Alcan of Montreal. There has only been one major newcomer in the world's cigarette industry since the 1920s, the South African Rembrandt group. And in an entire century only two newcomers have emerged as leading electrical apparatus manufacturers in the world: Philips in Holland and Hitachi in Japan. Indeed, industry and market structures appear so solid that the people in an industry are likely to consider them foreordained, part of the order of nature, and certain to endure forever.

Actually, market and industry structures are quite brittle. One small scratch and they disintegrate, often fast. When this happens, every member of the industry has to act. To continue to do business as before is almost a guarantee of disaster and might well condemn a com­pany to extinction*. At the very least the company will lose its leader­ship position; and once lost, such leadership is almost never regained. But a change in market or industry structure is also a major opportu­nity for innovation.

In industry structure, a change requires entrepreneurship from every member of the industry. It requires that each one ask anew: "What is our business?" And each of the members will have to give a different, but above all a new, answer to that question.

The automobile industry in the early years of the 20th century grew so fast that its markets changed drastically. There were four different re­sponses to this change, all of them successful. The early industry through 1900 had basically been a provider of a luxury product for the very rich. By then, however, it was outgrowing this narrow market with a rate of growth that doubled the industry's sales volume every three years. Yet the existing companies all still concentrated on the "carriage trade."*

One response to this was the British company, Rolls-Royce, founded in 1904. The founders realized that automobiles were growing so plentiful as to become "common," and set out to build and sell an automobile which, as an early Rolls-Royce prospectus put it, would have "the cachet of royalty."* They deliberately went back to earlier, already obsolete, manufacturing methods in which each car was ma­chined by a skilled mechanic and assembled individually with hand tools. And then they promised that the car would never wear out. They designed it to be driven by a professional chauffeur trained by Rolls-Royce for the job. They restricted sales to customers of whom they approved - preferably titled ones, of course. And to make sure that no "riff-raff"* bought their car, they priced the Rolls-Royce as high as a small yacht, at about forty times the annual income of a skilled mechanic or prosperous tradesman.

* might well condemn a com­pany to extinction - вполне может обречь компанию на гибель

* ”cаrriage trade”- богатые клиенты

* ”the cachet of royalty”- знак королевского достоинства

* ”riff-raff ”- низы общества

Ex.2. Say what you have learned about:

1. different states of industry and market structure;

2. the activity a change in industry structure requires;

3. the response of the British company to the changes in automobile industry;

Ex.3. Think and answer.

1. Why was the response of Rolls-Royce to the changes in automobile industry structure successful?

Lesson 4

Unit 1.

SUBJECT for STUDY: U.S. marketing in the future.