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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]

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30 Sep 2007, 17:48
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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?

A. 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.
B. Vernon itself acts as an independent supplier of specialized hardware items to certain manufacturers that formerly made those items themselves.
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.
D. Vernon plans to select the independent suppliers it will use on the basis of submitted bids.
E. 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.

[Reveal] Spoiler: OA

Last edited by reto on 01 Jul 2015, 21:41, edited 2 times in total.
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30 Sep 2007, 17:56
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eyunni wrote:
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?

(A)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.

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

(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.

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

(E)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.

I ll go for E. The idea here is to prove that by outsourcing Vernon would boost it profits. E tells us that by outsourcing, top managers can concentrate on core business who in turn would boost Vernon's profits (implied). No other option speaks about profitability.
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30 Sep 2007, 19:39
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Being 9 years in outsourcing industry I would be ashamed if I am wrong on this one.
E for me.
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30 Sep 2007, 20:04
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eyunni wrote:
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?

(A)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.

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

(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.

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

(E)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.

E.
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01 Oct 2007, 06:43
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I would have agreed with (E) but the choice stops short of mentioning that those inefficient tasks are indeed the tasks which are outsourced.

How can I assume the above without the argument mentioning it?

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01 Oct 2007, 07:00
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eyunni wrote:
I would have agreed with (E) but the choice stops short of mentioning that those inefficient tasks are indeed the tasks which are outsourced.

How can I assume the above without the argument mentioning it?

I think your concern is valid.

One reason why I chose E was that none of the other choices made sense.

Also consider this part of the stem -

outsourcing those parts of its business that independent suppliers can provide at a lower cost than Vernon can itself.

Now look at E

(E)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 --> Implies Vernon's TOP managers are spending time on things which an independent vendor can perform cheaply --> hence this time saved would be beneficial to the company and is in line with the outsourcing philosophy of getting work done cheaply and letting the costlier company resources (read top managers) to concentrate on core jobs.
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01 Oct 2007, 07:04
Quite clearly 'E'
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01 Oct 2007, 08:28
dwivedys wrote:
eyunni wrote:
I would have agreed with (E) but the choice stops short of mentioning that those inefficient tasks are indeed the tasks which are outsourced.

How can I assume the above without the argument mentioning it?

I think your concern is valid.

One reason why I chose E was that none of the other choices made sense.

Also consider this part of the stem -

outsourcing those parts of its business that independent suppliers can provide at a lower cost than Vernon can itself.

Now look at E

(E)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 --> Implies Vernon's TOP managers are spending time on things which an independent vendor can perform cheaply --> hence this time saved would be beneficial to the company and is in line with the outsourcing philosophy of getting work done cheaply and letting the costlier company resources (read top managers) to concentrate on core jobs.

hmmm....will take that.

OA is (E).
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31 Aug 2011, 10:27
Can some one please tell why not option C? What is wrong about it? If suppliers will turn to the competitor then outsourcing is not a good idea.
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31 Aug 2011, 10:58
ravisoft8400 wrote:
Can some one please tell why not option C? What is wrong about it? If suppliers will turn to the competitor then outsourcing is not a good idea.

(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.

Few reasons why:
1. If ONLY FEW manufacturers could become competitors, there is only a little chance that the vendors will start competing.
2. Company is not so much concerned with the competition as with the reduced efficiency and high cost. So far "A" supplies "B" what B wants at the cheaper rate, B is happy. What A does internally for its success and expansion is not of much concern to B. B can stop A from competing by not making its vendor, but there can be C's, D's and others. Irrelevant to the immediate objective that the Vernon Inc is concerned about.
3. Time frame to become the competitor is not mentioned. Perhaps it takes those suppliers 100 years to come to their client's level and the strategy and outsourcing mentioned in the passage may be for relatively short term.
4. The excel of the supplier may just be because of its efficient service and provision. That way, Vernon can actually expect more out of the supplier in terms of quality etc.

Although I mentioned few points here, I'd rejected C just by using point 2. Irrelevant to the Vernon's latest concern and objective.
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31 Aug 2011, 17:15
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31 Aug 2011, 20:08
fluke wrote:
ravisoft8400 wrote:
Can some one please tell why not option C? What is wrong about it? If suppliers will turn to the competitor then outsourcing is not a good idea.

(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.

Few reasons why:
1. If ONLY FEW manufacturers could become competitors, there is only a little chance that the vendors will start competing.
2. Company is not so much concerned with the competition as with the reduced efficiency and high cost. So far "A" supplies "B" what B wants at the cheaper rate, B is happy. What A does internally for its success and expansion is not of much concern to B. B can stop A from competing by not making its vendor, but there can be C's, D's and others. Irrelevant to the immediate objective that the Vernon Inc is concerned about.
3. Time frame to become the competitor is not mentioned. Perhaps it takes those suppliers 100 years to come to their client's level and the strategy and outsourcing mentioned in the passage may be for relatively short term.
4. The excel of the supplier may just be because of its efficient service and provision. That way, Vernon can actually expect more out of the supplier in terms of quality etc.

Although I mentioned few points here, I'd rejected C just by using point 2. Irrelevant to the Vernon's latest concern and objective.

Great explanation..But E is the clear winner as none of the other choices make sense with respect to the stimulus..
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10 Dec 2012, 02:45
Can somebody explain why not D? I am confused between D and E. E is also a good candidate....but D?
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19 Dec 2013, 00:58
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SreeViji wrote:
Can somebody explain why not D? I am confused between D and E. E is also a good candidate....but D?

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

This doesn't say how it will help Vernon to achieve its goal of boosting profit. It just says on what basis independent suppliers will be chosen. so clearly irrelevant.
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23 May 2014, 03:36
brugopal wrote:
SreeViji wrote:
Can somebody explain why not D? I am confused between D and E. E is also a good candidate....but D?

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

This doesn't say how it will help Vernon to achieve its goal of boosting profit. It just says on what basis independent suppliers will be chosen. so clearly irrelevant.

But it does say that Vernon will choose supplier which cost is lower than Vernon so according to that fact I think it is logical to choose D is not it? Also everybody says E but I do not agree. Because argument does not say anything about managers and etc. It does say its core business wil work better but it does not mention about managers . So I think it is D
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20 Mar 2015, 06:27
E . provides reasons to believe that the plan that was actually thought will work
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04 Apr 2016, 19:23
I really don't agree with E for the same reason stated earlier, how can you decide if the tasks performed inefficiently are the tasks which are outsourced..and even if managers are spending more time on them we dont really know if their paying attention on the core business will for sure boost profits as there are many variables. Anyway, the not to go out of scope, I will stick with the reason that we dont know if inefficient tasks are the ones outsourced.
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09 Apr 2016, 06:12
I am still confused why the answer cant be D.
Vernon main aim is to get the work done at a lower cost.
What if the thing is outsourced but is costly to the company?
The plan will be successful only if the costs are low.

D clearly states that Vernon will have bidding based on which it can select which company can be called in for outsourcing?
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15 Apr 2016, 22:27
eyunni wrote:
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?

A. 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.
argument is not concern about plans that Vernon does not plan to outsource. so out of scope choice it is.

B. Vernon itself acts as an independent supplier of specialized hardware items to certain manufacturers that formerly made those items themselves.
so what stated in this choice could help as motivation to have this plan come in place. but we are looking for a choice that tells YES, this plan will be successful. this is why it is an Out of scope choice.

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.
this choice says those independent suppliers of products or services are danger to those obtaining these services. this is a weaken-er type of choice.

D. Vernon plans to select the independent suppliers it will use on the basis of submitted bids.
this choice is an evaluation not strengthen. if no bidder provide service or product in lower cost than that vernon has to bear on its own then plan is failed. vice-versa, plan is successful. this is an EVALUATE choice.

E. 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.
If certain task that eat up all valuable time, time that can help business grow and in turn help reduce the cost, then it is good to outsource those task to indep suppliers. - this is strengthen-er choice.

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23 Aug 2016, 07:14
Very confusing one. There is no linkage between task that are performed inefficiently and tasks that could be done by outsource companies cheaply.
Re: Outsourcing is the practice of obtaining from an independent   [#permalink] 23 Aug 2016, 07:14

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