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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 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.

Please explain your answers.
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Re: CR: Outsourcing [#permalink] New post 30 Sep 2007, 17:56
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.

Please explain your answers.


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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Re: CR: Outsourcing [#permalink] New post 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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Re: CR: Outsourcing [#permalink] New post 30 Sep 2007, 20:04
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.

Please explain your answers.


E.
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 [#permalink] New post 01 Oct 2007, 06:43
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?

Any comments are greatly appreciated.
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 [#permalink] New post 01 Oct 2007, 07:00
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?

Any comments are greatly appreciated.



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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 [#permalink] New post 01 Oct 2007, 07:04
Quite clearly 'E'
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 [#permalink] New post 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?

Any comments are greatly appreciated.



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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Re: CR: Outsourcing [#permalink] New post 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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Re: CR: Outsourcing [#permalink] New post 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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Re: CR: Outsourcing [#permalink] New post 31 Aug 2011, 17:15
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Re: CR: Outsourcing [#permalink] New post 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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Re: Outsourcing is the practice of obtaining from an independent [#permalink] New post 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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Re: Outsourcing is the practice of obtaining from an independent [#permalink] New post 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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Re: Outsourcing is the practice of obtaining from an independent [#permalink] New post 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
Re: Outsourcing is the practice of obtaining from an independent   [#permalink] 23 May 2014, 03:36
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