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In this video tutorial, the presenter explains how to create a letterhead in Word 2013, save it as a template, and draft a business letter. The process begins with opening a blank document and saving it as "letterhead.docx." The presenter creates the letterhead by entering the business name, address, email, and inserting a graphic. To add the image, they navigate to "Insert," select "online pictures," search for "graduation," and then resize the chosen image. The tutorial emphasizes the importance of saving the letterhead as a template for future use in printing letters.