Outsourcing is the practice of obtaining from an independent supplier a product or service that a company has previously provided for itself. Since a company’s chief objective is to realize the highest possible year-end profits, any product or service that can be obtained from an independent supplier for less than it would cost the company to provide the product or service on its own should be outsourced.
Which of the following, if true, most seriously weakens the argument?
(A) If a company decides to use independent suppliers for a product, it can generally exploit the vigorous competition arising among several firms that are interested in supplying that product.
(B) Successful outsourcing requires a company to provide its suppliers with information about its products and plans that can fall into the hands of its competitors and give them a business advantage.
(C) Certain tasks, such as processing a company’s payroll, are commonly outsourced, whereas others, such as handling the company’s core business, are not.
(D) For a company to provide a product or service for itself as efficiently as an independent supplier can provide it, the managers involved need to be as expert in the area of that product or service as the people in charge of that product or service at an independent supplier are.
(E) When a company decides to sue an independent supplier for a product or service, the independent supplier sometimes hires members of the company’s staff who formerly made the product or provided the service that the independent supplier now supplies.
Similar Question
https://gmatclub.com/forum/outsourcing- ... 53143.htmlArgument Evaluation
Situation
In order to realize the highest year-end profits, a company should outsource any service or product that can be obtained from an independent supplier for less than it would cost the company to provide that service or product itself.
Reasoning
What weakens this argument? When could outsourcing a service or product result in a business disadvantage or lower profits? It is clear that the company must give independent suppliers enough information to enable them to provide the contracted products and services, but this means that the company can lose control over who has possession of such critical information. If the information becomes known to the company’s competitors and gives them a business advantage, the company’s profitability may be harmed rather than helped by outsourcing. This possibility weakens the argument.
(A) This would strengthen the argument since the pricing competition among independent suppliers
is an advantage for the company.
(B) Correct. This statement properly identifies one disadvantage of outsourcing: the company no longer controls access to its information and plans. With the increased possibility of competitors’ gaining access to its proprietary information, the company’s business is put at risk.
(C) Providing examples of the tasks typically outsourced or handled internally does not affect the argument.
(D) Expertise in a particular area is an advantage of outsourcing and thus a strength of the argument.
(E) The supplier’s hiring of members of the company’s staff to handle work no longer performed within the company is not shown to be a disadvantage.
The correct answer is B.