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Manager
Joined: 29 Jul 2012
Posts: 189
GMAT Date: 11-18-2012
Followers: 0

Kudos [?]: 85 [1] , given: 23

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13 Dec 2012, 02:11
1
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100% (03:56) correct 0% (00:00) wrong based on 2

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Question 2
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In the decades following World War II, American business had undisputed control of the world economy, producing goods of such high quality and low cost that foreign corporations were unable to compete. But in the mid-1960s the United States began to lose its advantage and by the 1980s American corporations lagged behind the competition in many industries. In the computer chip industry, for example, American corporations had lost most of both domestic and foreign markets by the early 1980s.

The first analysts to examine the decline of American business blamed the U.S. government. They argued that stringent governmental restrictions on the behaviour of American corporations, combined with the wholehearted support given to foreign firms by their governments, created and environment in which American products could not compete. Later analysts blamed predatory corporate raiders who bought corporations, not to make them more competitive in the face of foreign competition, but rather to sell off the most lucrative divisions for huge profits.

Still later analysts blamed the American workforce, citing labour demands and poor productivity as the reasons American corporations have been unable to compete with Japanese and European firms. Finally, a few analysts even censured American consumers for their unpatriotic purchases of foreign goods. The blame actually lies with corporate management, which has made serious errors based on misconceptions about what it takes to be successful in the marketplace. These missteps involve labour costs, production choices, and growth strategies.

Even though labour costs typically account for less than 15% of a product‘s total cost, management has been quick to blame the costs of workers‘ wages for driving up prices, making American goods uncompetitive. As a result of attempts to minimize the cost of wages, American corporations have had trouble recruiting and retaining skilled workers.

The emphasis on cost minimization has also led to another blunder: an over-concentration on high technology products. Many foreign firms began by specializing in the mass production and sale of low technology products, gaining valuable experience and earning tremendous profits. Later, these corporations were able to break into high technology markets without much trouble; they simply applied their previous manufacturing experience and ample financial resources to the production of higher quality goods. American business has consistently ignored this very sensible approach.

The recent rash of corporate mergers and acquisitions in the U.S. has not helped the situation either. While American firms have neglected long-range planning and production, preferring instead to reap fast profits through mergers and acquisitions, foreign firms have been quick
to exploit opportunities to ensure their domination over future markets by investing in the streamlining and modernization of their facilities
1. The passage suggests that compared to Japanese workers, American workers are often considered:
A. more content and more efficient.
B. more content but less efficient.
C. less content and less efficient.
D. less content but more efficient.
E. lazy and less hard working

[Reveal] Spoiler:
C

2. With which of the following general statements would the author most likely NOT agree?
A. American business has been hurt by the inability to plan for the long-term.
B. Cutting production costs always leads to increased competitiveness.
C. American consumers are not the prime cause of the decline of American business.
D. Initial analysis of the decline of American business yielded only partially accurate conclusions.
E. Mergers and Acquisitions have not helped improve the situation

[Reveal] Spoiler:
B

3. Which of the following would most weaken the author‘s argument about the over-concentration on high technology products?
A. Producing low tech products is not as profitable as producing high tech products.
B. Manufacturing high tech products is a completely different process than manufacturing low tech goods.
C. Most of the low tech products purchased by Americans are made by foreign firms.
D. Most of the high tech products purchased by Americans are made by foreign firms.
E. Most of the high tech products purchased by Americans are made by American firms.

[Reveal] Spoiler:
B

4. The author of this passage would probably give his greatest support to which of the following actions by the corporate management of an American company?
A. Acquiring a smaller company in order to gain financial resources
B. Considering the option of paying the most highly skilled workers a higher wage
C. Trying to learn from the general management strategy of foreign firms
E. Flooding foreign markets with cheap goods

[Reveal] Spoiler:
C

[Reveal] Spoiler: Question #1 OA
[Reveal] Spoiler: Question #2 OA
[Reveal] Spoiler: Question #3 OA
[Reveal] Spoiler: Question #4 OA

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Manager
Joined: 09 Nov 2012
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GMAT 1: 700 Q43 V42
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Kudos [?]: 65 [1] , given: 29

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03 Jan 2013, 13:51
1
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1. C. The answer to this question can be found in the third paragraph. It mentions "citing labour demands and poor productivity". One can infer from this that US workers are not content (which is why they would make demands) and inefficient (inefficient=poor productivity).

2. B. A is incorrect because of the last paragraph where it mentions how the US has focused only on the short term. C is incorrect because of the third paragraph. Several analysts blamed US consumers. Because the author mentioned this, one can infer that he would argue it. D and E are also incorrect. The author actually explicitly argues E in the last paragraph.

3. B. The author's argument relies on the assumption that to manufacture high-tech products requires the abandonment of manufacturing low-tech products. Saying that it does not weakens the argument.

4. C. This one is pretty easy. The author spends the entire passage talking about how foreign firms have no made the same mistakes as their American counterparts.

I hope that helps
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23 Oct 2014, 07:55
Hello from the GMAT Club VerbalBot!

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