Outsourcing is the practice of obtaining from an independent supplier

The objective is to increase profits by lowering cost of certain inputs.
If these inputs can be bought at a cheaper rate from some independent suppliers, it would decrease the cost.
If the managers are wasting a lot of time getting these inputs ready, then it makes sense that not only cost will decrease but managers will be able to focus more on core business and hence profits are likely to increase. Hence (E) works.

As for (C), whether independent suppliers expand to become competitors has nothing to do with Vernon's decision to use them. Irrespective of whether Vernon uses them or not, the independent suppliers will decide whether they want to expand to make the whole product that Vernon is supplying. All Vernon has to focus on is its own profitability and how to maximise it.
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Can't it be taken other way.
During independent bids, it will be a natural phenomenon to select the bidder whose bid is the lowest. If this happens, then won't the bidding process will help boost the profits.

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.

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.

Vernon, Inc., intends to boost its profits by outsourcing those parts of its business that independent suppliers can offer at a lower cost.
To strengthen this claim, the right answer choice would provide a strong reason as to why this plan would bear fruits.


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 lower cost than Vernon can.

The parts of its business that Vernon DOES NOT plan to outsource is not of any concern. Wrong.

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

The fact that Vernon is a supplier to other manufacturers does not support the fact that the plan to outsource will increase the profits. Wrong.

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.

No relation to Vernon's claim. Wrong.

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

How the suppliers would be selected does not influence the efficiency of this plan. Wrong.

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.

"...those parts of its business that
independent suppliers can provide at lower cost than Vernon can itself."
This portion suggests that some of the independent suppliers can provide the same product/service to Vernon at a relatively
lower cost. This implies that Vernon is not performing these tasks in the most optimum or efficient way.
Answer choice E also suggests that top managers were spending a lot of time on certain tasks that were inefficient.
And if they weren't attending to these tasks, their time would have been put to better use attending to Vernon's core business.
Since most top managers would be focusing on the core business of Vernon, it would be more likely that they would help Vernon increase its profits, rather than spending their time on inefficient tasks.

So out of all the answer choices, E is the right one.

I have just one issue with D.

The stimuli says "..by outsourcing those parts of its business that independent suppliers CAN PROVIDE at lower cost than Vernon can itself"

This suggests that the independent suppliers are in a position to offer these services at a lower cost. But during the bidding process, there is no certainty that the lowest bid will ACTUALLY be lower than the cost incurred by Vernon. It may just be the lowest of all the bids, but not necessarily lower than Vernon's own cost. The bidders might quote higher prices just to boost their own profits. So it is a possibility that the bidding process might boost profits of Vernon, but there is still enough doubt in this option to not consider it.

On the other hand, the top managers are a part of Vernon. So it can be safely said that once they are given more time to concentrate on core business of Vernon, their entire focus would be on boosting the profits. I would still prefer E.

Official Explanation

Answer: E The organization believes that by spicing up its newsletter, it will boost its popularity, counteracting the recent decline in membership. The underlying assumption is that one has anything to do with the other. If members are leaving the group for some other reason - say, a scandal concerning management of funds – spicing up the newsletter is unlikely to do any good. Thus, in this strengthen question, we're looking for a choice that confirms the assumption. (E) is the only choice that does that, so it is correct.

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.

Hello GMATNinja



Are we not selecting A because it is kind of rephrasing the conclusion itself?

Best
Pratik

Vernon's conclusion: Outsourcing parts of Vernon's business (that independent suppliers can provide at a lower cost that Vernon) will boost Vernon's profits.

A lot of folks have rightly eliminated answer choices that don't address this specific conclusion.

Choice (A) is no exception. It doesn't rephrase the conclusion. Instead, it gives us an irrelevant detail about what Vernon is not going to outsource. Why do we care about the work that Vernon won't outsource? Knowing why they make that choice doesn't impact the conclusion that outsourcing parts of the business will boost profits.

That's why we eliminate (A). I hope this helps!
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I agree with eyunni's point.
"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? "

Can any expert please clarify how we can link the tasks the are outsourced to the tasks that employees currently perform inefficiently. We are not told that these are the very same tasks that are outsourced.

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

(E): ... tasks that Vernon performs relatively inefficiently...
Vernon performs them inefficiently compared with independent suppliers. So it implies that these are the tasks that are outsourced.
Besides no other option comes close to being the answer.
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Esshhhh,

It’s never wise to argue with an official question. It is absolutely pointless and you gain nothing.

But are we sure this is an official question?

Someone posted a weird official explanation maybe as a joke. If there exists an official explanation I would love to see it

Edit: now I see the question that this is linked to. There is a good chance that this is not an official question. Until an official explanation for this exact question is posted (and not a link to a “similar” official question that makes perfect logical sense), I might be a little wary about following this question.


Edit edit: What is “IvyGMAT”?
Where is my friend AndrewN

Posted from my mobile device

Good catch, Fdambro294. I doubt this question ever existed in the OG 10, as it is labeled, since its sister question has multiple sources (OGs from different years) and is more logically sound. Furthermore, I agree that the OE provided by avohden on page 1 does not connect to the question at hand, although there are some similarities. Until someone with an old OG can confirm that this iteration of the question appeared therein, we can only wonder.

As for Ivy GMAT, I came across this old thread in which two people have some not-so-positive things to say about the materials the company used. Make of this what you will.

- Andrew
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(I am writing the reply in the same manner as I solve it)

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

Read q. stem carefully: It tells us that we need to find among the answer choices an answer that will support Vernon's prediction that the plan will be successful.
Hence we know a few things:
1. This is a strengthen question, hence we need to find the conclusion first
2. The answer will be additional information.
3. And there will be some prediction done by V.


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.

Conclusion of V's plan: Outsourcing parts of its business that independent suppliers can provide at lower cost will BOOST Vernon's profits.

Let's look at the answer options:

(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.

This is out of scope for us. Comparison of the conclusion is between parts V wants to outsource. Not between parts V does not plan to outsource.

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

This answer option doesn't tell us anything about profitability of the other organization. Even if it did, I would still not want to choose this as a reason to strengthen as what happened in another company could not predict what will happen at Vernon.

(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.

I initially liked this option because of our own corporate fears however felt a) this only talks about manufacturing (we don't know how much of V's business that will be outsourced would be manufacturing) and more importantly it doesn't strengthen our conclusion that V's plan will boost its profits.

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

I had liked this option as well, however noticed that V plans to outsource to companies that can provide the service or manufacturing at a lower cost than V. Any cost that will be lower than Vs will boost the profit. Bidding will only increase the degree to which the profit can be boosted.

(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 like this option as it suggests the impact of V's decision is manifold. a) it increases immediate profitability by outsourcing to cheaper vendors. and b) it increases focus of top managers on core business. Hence increasing efficiency as well.

Can someone explain why option C is incorrect?

VeritasKarishma GMATNinja

VeritasKarishma For C, 'few manufacturers become direct competitors of the companies they once supplied' shows that if we outsource to another company, there will be less chances of them being a direct competitor. Doesn't having less direct competitors increase profits? You spend less on marketing, sell more products etc. On the other hand, for E, we have no idea if the managers having extra time will boost profits or not, it's less directly related to profits.

smackmyface - "if we outsource to another company, there will be less chances of them being a direct competitor"
is not accurate.
(C) says "few independent suppliers have been able to expand their business and become direct competitors". So independent suppliers perhaps do try to expand but few are able to do it successfully. Whether Vernon gives them its business or not does not change anything. They are independent suppliers so they provide outsourcing services. They may also in any case try to expand and become competitors but they are usually not successful. Vernon's decision does not change anything. Its decision only affects its own profitability.
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