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In this tutorial, the first step is to apply text wrap to an image inserted in Microsoft Word. To do this, click on the photo, go to the on-demand format menu, and select text wrap. You can choose options like tight square or through to make the image movable. Once wrapped, you can position the image by clicking on it and moving it. To label the image, go to the insert menu, select shapes, and draw an arrow towards the object. Adjust the arrow's weight, color, and size as needed.