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Outsourcing is the practice of obtaining from an independent

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Outsourcing is the practice of obtaining from an independent [#permalink] New post 26 Feb 2007, 15:26
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A
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C
D
E

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Outsourcing is the practice of obtaining from an independent supplier a product or service that a company has previously provided for itself. Vernon, Inc, a small manufacturing company that has in recent years experienced a decline in its profits, plans to boost its profits by outsourcing those parts of its business that independent suppliers can provide at a lower cost than Vernon can itself.

Which of the following, if true, most strongly supports the prediction that Vernon’s plan will achieve its goal?

Among the parts of its business that Vernon does not plan to outsource are some that require standards of accuracy too high for most independent suppliers to provide at a lower cost than Vernon can.

Vernon itself acts as an independent supplier of specialized hardware items to certain manufacturers that formerly made those items themselves.

Relatively few manufacturers that start as independent suppliers have been able to expand their business and become direct competitors of the companies they once supplied.

Vernon plans to select the independent suppliers it will use on the basis of submitted bids.

Attending to certain tasks that Vernon performs relatively inefficiently has taken up much of the time and effort of top managers whose time would have been better spent attending to Vernon’s core business.
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 [#permalink] New post 26 Feb 2007, 15:37
I would go with E.
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 [#permalink] New post 26 Feb 2007, 18:05
E is correct...it provides another reason why the parts of business that Vernon wants to outsource is unprofitable. By outsourcing, the managers can then devote their time to other activities, further boosting profitability.
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 [#permalink] New post 26 Feb 2007, 22:46
One more E.
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 [#permalink] New post 27 Feb 2007, 06:46
'D'

I think first step of successful outsourcing is to collect bids and select the outsourcing company based on the bids. To be successful in outsourcing, this statement only supports the Vernon's plan.
In my opinion, Option 'E' is true but option 'D' is stronger than 'E'.
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 [#permalink] New post 27 Feb 2007, 15:32
What's wrong with C?

Relatively few manufacturers that start as independent suppliers have been able to expand their business and become direct competitors of the companies they once supplied.

because if they did become competitors, they would take business and thus hurt profits.

E assumes that efficiency is necessarily related to profitability. So what if they have more time to devote to core business? I dont see the direct connection (in the context of this question).
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 [#permalink] New post 27 Feb 2007, 16:21
I would go with E.
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 [#permalink] New post 02 Mar 2007, 09:03
E - shows inefficiency that can be outsourced so focus from management can be shifted to more important issues.
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 [#permalink] New post 02 Mar 2007, 13:25
E for me

Among the parts of its business that Vernon does not plan to outsource are some that require standards of accuracy too high for most independent suppliers to provide at a lower cost than Vernon can.

Will not affect profitability

Vernon itself acts as an independent supplier of specialized hardware items to certain manufacturers that formerly made those items themselves.
Unrelated
Relatively few manufacturers that start as independent suppliers have been able to expand their business and become direct competitors of the companies they once supplied.
Unrelated
Vernon plans to select the independent suppliers it will use on the basis of submitted bids.
It is a criteria for outsourcing and doesn’t strengthen its benefits
Attending to certain tasks that Vernon performs relatively inefficiently has taken up much of the time and effort of top managers whose time would have been better spent attending to Vernon’s core business.
It will increase the productivity and efficiency
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 [#permalink] New post 02 Mar 2007, 13:44
OK, clearly I'm the only one that thought C was good.

Good job guys! OA is E
  [#permalink] 02 Mar 2007, 13:44
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