Federal Express is a company that specializes in rapid overnight delivery of high-priority packages. The first company of its type, Federal Express was founded by the youthful Fred Smith in 1971, when he was only 28 years old. Smith had actually developed the idea for the rapid delivery service in a term paper for an economics class when he was a student atYaleUniversity. The term paper reputedly received a less-than-stellar grade because of the infeasibility of the project that Smith had outlined. The model that Smith proposed had never been tried; it was a model that was efficient to operate but at the same time was very difficult to institute.
Smith achieved efficiency in his model by designing a system that was separate from the passenger system and could, therefore, focus on how to deliver packages most efficiently. His strategy was to own his own planes so that he could create his own schedules and to ship all packages through the hub city ofMemphis, a set-up which resembles the spokes on the wheel of a bicycle. With this combination of his own planes and hub set-up, he could get packages anywhere in theUnited States overnight.
What made Smith’s idea difficult to institute was the fact that the entire system had to be created before the company could begin operations. He needed a fleet of aircraft to collect packages from airports every night and deliver them to Memphis, where they were immediately sorted and flown out to their new destinations; he needed a fleet of trucks to deliver packages to and from the various airports; he needed facilities and trained staff all in place to handle the operation. Smith had a $4 million inheritance from his father, and he managed to raise an additional $91 million dollars from venture capitalists to get the company operating.
When Federal Express began service in 1973 in 25 cities, the company was not an immediate success, but success did come within a relatively short period of time. The company lost $29 million in the first 26 months of operations. However, the tide was to turn relatively quickly. By late 1976, Federal Express was carrying an average of 19,000 packages per night and had made a profit of $3.6 million.
Question 42: The most appropriate title for this passage is _____.
A. The Capitalization of Federal Express
B. The Importance of Business Studies
C. The Implementation of a Successful Business
D. The Problems and Frustrations of a Business Student
Question 43: The word "developed" in paragraph 1 could best be replaced by _____.
A. come up with B. come into C. come across D. come about
Question 44: What is stated in the passage about Smiths' term paper?
A. It was written by a student of Smith’s. B. Smith submitted it through a deliver service.
C. The professor thought it had great potential. D. Its grade was mediocre.
Question 45: What was a key idea of Smiths?
A. That he should focus on passenger service
B. That packages could be delivered on other companies’ planes
C. That package delivery should be separate from passenger service
D. That passenger service had to be efficient
Question 46: A "hub city" in paragraph 2 is _____.
A. a centralized city with destinations emanating from it
B. a city that is the final destination for many routes
C. a large city with small cities as destinations
D. a city where many bicycle routes begin
Question 47: It can be inferred from the passage that Smith selectedMemphis as his hub city because it _____.
A. already had a large package delivery service B. had a large number of passenger aircraft
C. was near the middle of the country D. was a favorite passenger airport
Question 48: The pronoun "they" in paragraph 3 refers to _____.
A. destinations B. aircraft C. packages D. airports
Question 49: It is NOT mentioned in the passage that, in order to set up his company, Smith needed _____.
A. faculty B. trucks C. personnel D. airplanes
Question 50: How long did it take Federal Express to become profitable?
A. One year B. Six years C. Two months D. Three years
Question 51: Which paragraph explains what made Smith’s model effective?
A. The second paragraphB. The third paragraphC. The last paragraph D. The first paragraph