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In corporate purchasing, competitive scrutiny is typically

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BSchool Thread Master
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Joined: 28 May 2012
Posts: 138
Location: India
Concentration: General Management, Strategy
GPA: 3.33
WE: Information Technology (Retail)
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Kudos [?]: 33 [0], given: 11

In corporate purchasing, competitive scrutiny is typically [#permalink] New post 30 Sep 2012, 01:19
In corporate purchasing, competitive scrutiny is typically limited to suppliers of items that are directly related to end products. With “indirect” purchases (such as computers, advertising, and legal services), which are not directly related to production, corporations often favor “supplier partnerships” (arrangements in which the purchaser forgoes the right to pursue alternative suppliers), which can inappropriately shelter suppliers from rigorous competitive scrutiny that might afford the purchaser economic leverage. There are two independent variables—availability of alternatives and ease of changing suppliers—that companies should use to evaluate the feasibility of subjecting suppliers of indirect purchases to competitive scrutiny. This can create four possible situations.

In Type 1 situations, there are many alternatives and change is relatively easy. Open pursuit of alternatives—by frequent competitive bidding, if possible—will likely yield the best results. In Type 2 situations, where there are many alternatives but change is difficult—as for providers of employee health-care benefits—it is important to continuously test the market and use the results to secure concessions from existing suppliers. Alternatives provide a credible threat to suppliers, even if the ability to switch is constrained. In Type 3 situations, there are few alternatives, but the ability to switch without difficulty creates a threat that companies can use to negotiate concessions from existing suppliers. In Type 4 situations, where there are few alternatives and change is difficult, partnerships may be unavoidable.
Q35:Which of the following best describes the relation of the second paragraph to the first?
A. The second paragraph offers proof of an assertion made in the first paragraph.
B. The second paragraph provides an explanation for the occurrence of a situation described in the first paragraph.
C. The second paragraph discusses the application of a strategy proposed in the first paragraph.
D. The second paragraph examines the scope of a problem presented in the first paragraph.
E. The second paragraph discusses the contradictions inherent in a relationship described in the first paragraph.
[Reveal] Spoiler:
C


Q36:Which of the following can be inferred about supplier partnerships, as they are described in the passage?
* They cannot be sustained unless the goods or services provided are available from a large number of suppliers.
* They can result in purchasers paying more for goods and services than they would in a competitive-bidding situation.
* They typically are instituted at the urging of the supplier rather than the purchaser.
* They are not feasible when the goods or services provided are directly related to the purchasers' end products.
* They are least appropriate when the purchasers' ability to change suppliers is limited.
[Reveal] Spoiler:
B


Q37:According to the passage, which of the following factors distinguishes an indirect purchase from other purchases?
* The ability of the purchasing company to subject potential suppliers of the purchased item to competitive scrutiny
* The number of suppliers of the purchased item available to the purchasing company
* The methods of negotiation that are available to the purchasing company
* The relationship of the purchased item to the purchasing company's end product
* The degree of importance of the purchased item in the purchasing company's business operations
[Reveal] Spoiler:
D


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Re: In corporate purchasing, competitive scrutiny [#permalink] New post 30 Sep 2012, 07:22
Also did the same mistake as yours @ankit.

I guess its all about the wording between the two options, now after re-reading it I can see the incorrect option has a wording of "Examining the Scope" v/s in correct option "Application of strategy".

My 2 cents now lie on this wording - This can create four possible situations.
This line suggests "Application" is better than "Examination"

Otherwise these are very close choices, If I would have got this RC in thick of time,my first gut would be {D} and I would move on not realizing I did a mistake. Ticking on {C} here would be the Differentiator in getting V40 and V37 !!!

Can RC gurus throw some Big Light for seekers like us!!!
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Kudos [?]: 33 [0], given: 11

Re: In corporate purchasing, competitive scrutiny [#permalink] New post 30 Sep 2012, 07:25
methevoid wrote:
Also did the same mistake as yours @ankit.

I guess its all about the wording between the two options, now after re-reading it I can see the incorrect option has a wording of "Examining the Scope" v/s in correct option "Application of strategy".

My 2 cents now lie on this wording - This can create four possible situations.
This line suggests "Application" is better than "Examination"

Otherwise these are very close choices, If I would have got this RC in thick of time,my first gut would be {D} and I would move on not realizing I did a mistake. Ticking on {C} here would be the Differentiator in getting V40 and V37 !!!

Can RC gurus throw some Big Light for seekers like us!!!


I understand the difference, there is a very subtle shift of meaning between the two choices.

Even if we stick close to the scope of passage, it's really hard to differentiate.

anyone any thoughts on this ?
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Re: In corporate purchasing, competitive scrutiny   [#permalink] 30 Sep 2012, 07:25
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