Passage 1??
Recent years have brought minority-owned businesses in the United States unprecedented1 opportunities-as well as new and significant risks. Civil rights activists2 have long argued that one of ?the principal reasons why Blacks, Hispanics, and other minority groups have difficulty establishing themselves in business is that they lack access to the sizable orders and subcontracts that are generated by large companies. Now Congress, in appar
ent agreement, has required by law that businesses awarded federal contracts of more than $500,000 do their best to find minority subcontractors and record their efforts to do so on forms filed with the government. Indeed, some federal and local agen- cies have gone so far as to set specific percentage goals for apportioning4 parts of public works con- tracts3 to minority enterprises.
? Corporate5 response appears to have been sub- stantial. According to figures collected in 1977, the total of corporate contracts with minority busi- nesses rose from $77 million in 1972 to $1. lbillion in 1977. The projected total of corporate contracts with minority businesses for the early 1980s is estimated to be over 53 billion per year with no letup anticipated in the next decade. ?Promising6 as it is for minority businesses, this increased patronage7 poses dangers for them, too. First, minority firms risk expanding too fast and overextending themselves financially, since most are small concerns and, unlike large businesses, they often need to make substantial investments in new plants, staff, equipment, and the like in order to perform work subcontracted to them. If, there-
after, their subcontracts are for some reason reduced, such firms can face potentially crippling fixed8 expenses. The world of corporate purchasing can be frustrating9 for small entrepreneurs who get requests for elaborate formal estimates and bids. Both consume valuable time and resources, and a ?small companys efforts must soon result in orders, or both the morale11 and the financial health of the business will suffer.
? A second risk is that White-owned companies may seek to cash in on the increasing apportion- ments through formation of joint12 ventures with minority-owned concerns. Of course, in many instances there are legitimate13 reasons for joint ventures; clearly, White and minority enterprises can team up to acquire business that neither could acquire alone. But civil rights groups and minority business owners have complained to Congress about
minorities being set up as fronts with White back- ing, rather than being accepted as full partners in legitimate joint ventures. ???Third, a minority enterprise that secures the business of one large corporate customer often run the danger of becoming--and remaining-dependent. Even in the best of circumstances, fierce compe-
tition from larger, more established companies makes it difficult for small concerns to broaden their customer bases: when such firms have nearly guaranteed orders from a single corporate bene- factor, they may truly have to struggle against complacency arising from their current success.
1. The primary purpose of the passage is to
? present a commonplace idea and its naccuracies
? describe a situation and its potential drawbacks
? propose a temporary solution to a problem
? analyze14 a frequent source of disagreement
? explore the implications of a finding
2. The passage supplies information that would answer
?which of the following questions?
? What federal agencies have set percentage goals for the use of minority-owned businesses in public works contracts?
? To which government agencies mustbusinesses awarded federal contracts report theirefforts to find minority subcontractors?
? How widespread is the use of minority-ownedconcerns as fronts by White backers seeking toobtain subcontracts?
? How many more minority-owned businesses werethere in 1977 than in 1972?
? What is one set of conditions under which asmall business might find itself financially over-extended?
?
3. According to the passage, civil rights activists maintain that one disadvantage under which minority- owned businesses have traditionally had to labor10 is that they have
? been especially vulnerable to governmentalmismanagement of the economy
? been denied bank loans at rates comparable tothose afforded larger competitors
? not had sufficient opportunity to secure businesscreated by large corporations
? not been able to advertise in those media thatreach large numbers of potential customers
? not had adequate representation in the centers ofgovernment power
4. The passage suggests that the failure of a large business to have its bids for subcontracts result quickly in orders might cause it to
? experience frustration15 but not serious financialharm
? face potentially crippling fixed expenses
? have to record its efforts on forms filed with thegovernment
? increase its spending with minoritysubcontractors
? revise its procedure for making bids for federalcontracts and subcontracts
5. The author implies that a minority-owned concern that does the greater part of its business with one large corporate customer should
? avoid competition with larger, more establishedconcerns by not expanding?
? concentrate on securing even more businessfrom that corporation?
? try to expand its customer base to avoidbecoming dependent on the corporation?
? pass on some of the work to be done for thecorporation to other minority-owned concerns
? use its influence with the corporation to promotesubcontracting with other minority concerns
6. It can be inferred from the passage that, comparedwith the requirements of law, the percentage goalsset by some federal and local agencies are
? more popular with large corporations
? more specific
? less controversial
? less expensive to enforce
? easier to comply with
7. Which of the following, if true, would most weaken the authors assertion that, in the 1970s, corporate ?response to federal requirements was substantial
? Corporate contracts with minority-owned businesses totaled $2 billion in 1979.
? Between 1970 and 1972, corporate contracts with minority-owned businesses declined by 25 percent.
? The figures collected in 1977 underrepresented the extent of corporate contracts with minority- owned businesses.
? The estimate of corporate spending with minority-owned businesses in 1980 is approximately $10 million too high.
? The $1.1 billion represented the same percentage of total corporate spending in 1977 as did $77 million in 1972.
8. The author would most likely agree with which of thefollowing statements about corporate response to working with minority subcontractors?
? Annoyed by the proliferation of frontorganizations, corporations are likely to reducetheir efforts to work with minority-ownedsubcontractors in the near future.
? Although corporations showed considerableinterest in working with minority businesses inthe 1970s, their aversion to government paperwork made them reluctant to pursue manygovernment contracts.?
? The significant response of corporations in the1970s is likely to be sustained and conceivablybe increased throughout the 1980s.
? Although corporations are eager to cooperatewith minority-owned businesses, a shortage ofcapital in the 1970s made substantial response impossible.
? The enormous corporate response has all buteliminated the dangers of overexpansion thatused to plague small minority-owned businesses
