NEW HERE? LEARN MORE
closeclose
Last visit was: 25 Apr 2024, 06:34 It is currently 25 Apr 2024, 06:34
Decision Tracker
My Rewards
New posts
New comers' posts

Close
GMAT Club Daily Prep
Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History
Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.
Go to My Error Log Learn more
Close
Request Expert Reply
Confirm Cancel

Panda Corporation is a large American manufacurer of

SORT BY:
Date
Kudos
Tags:
Find Similar Topics 
Show Tags
Hide Tags
User avatar
prashantbacchewar
Manager
Manager
Joined: 20 Apr 2010
Posts: 154
Own Kudos [?]: 248 [38]
Given Kudos: 28
Concentration: Finacee, General Management
Schools:ISB, HEC, Said
 Q48  V28
Send PM
Panda Corporation is a large American manufacurer of [#permalink] New post   Updated on: 22 Nov 2017, 22:49
2
Kudos
36
Bookmarks
00:00
A
B
C
D
E

Difficulty:

75% (hard)

Question Stats:

55% (02:23) correct 45% (02:30) wrong based on 1113 sessions
Hide Show timer Statistics
Panda Corporation is a large American manufacurer of children's clothing that has recently undertaken sharp measures to remain competitive in todays global market. In response to offshore pricing pressures, Panda Corporation laid off over 500 employees, reducing operational expenses by 18%. Since clothing manufacturers realize a one percentage point increase in sales margins for every five percentage point decrease in operational expenses, the Board of directors is satisfied that these measures will ensure Panda Corporation's long-term sustainability.

Based on the passage, which of the following, if true, would most weaken Board's stance?

A. Panda corporations main competitor is also an American manufacturer.
B. Panda corporations main competitor is based in China.
C. The largest manufacturer of children's clothes in China has just reduced its operational expenses by 15%
D. US consumers do not want to buy clothes manufactured offshore.
E. A large US manufacturer of childeren's clothes plans to relocate its operations to China.
ShowHide Answer
Official Answer
C

Originally posted by prashantbacchewar on 09 Oct 2011, 01:39.
Last edited by Mahmud6 on 22 Nov 2017, 22:49, edited 1 time in total.
Formatted & Edited
Most Helpful Reply
avatar
TAL010
Intern
Intern
Joined: 09 Apr 2013
Status:Onward and upward!
Posts: 10
Own Kudos [?]: 25 [14]
Given Kudos: 72
Location: United States
Re: Panda Corporation is a large American manufacurer of [#permalink] New post   27 Oct 2013, 14:00
13
Kudos
1
Bookmarks
shrive555 wrote:
prashantbacchewar wrote:
Panda Corporation is a large American manufacurer of children's clothing that has recently undertaken sharp measures to remain competitive in todays global market. In response to offshore pricing pressures, Panda Corporation laid off over 500 employees, reducing operational expenses by 18%. Since clothing manufacturers realize a one percentage point increase in sales margins for every five percentage point decrease in operational expenses, the Board of directors is satisfied that these measures will ensure Panda Corporation's long-term sustainability.
.


based on bold lines, what's wrong with D, if consumers do not buy cloths manufactured offshore, it will decrease sales, since sales and operational expenses are proportional, No matter what % of operational expenses is reduced,if sales is not increasing then sustainability of corporation can be questioned.





I'll take a stab at explaining how I reached C as the final answer.

Panda Corporation is a large American manufacurer of children's clothing that has recently undertaken sharp measures to remain competitive in todays global market. In response to offshore pricing pressures, Panda Corporation laid off over 500 employees, reducing operational expenses by 18%. Since clothing manufacturers realize a one percentage point increase in sales margins for every five percentage point decrease in operational expenses, the Board of directors is satisfied that these measures will ensure Panda Corporation's long-term sustainability.

I understood the stimulus like so: Panda Corp is an American company that wants to stay competitve in the global market. PC believes the best course would be to cut operational costs. The board cuts operational costs by 18%-- knowing that every 5% cut corresponds with a 1% increase in sales. So basically they are expecting a 3%+ increase in sales.(margin = revenue - cost)

This is a weaken question - so we are looking for an answer that best attacks the stimulus.

Based on the passgae, which of the following, if true, would most weaken Board's stance?
A. Panda corporations main competitor is also an American manufacturer. Even if so, doesn't weaken or strenghten the argument whatsoever.
B. Panda corporations main competitor is based in China. Same as above. Doesn't deal with any questions why their plan will not work.
C. The largest manufacturer of children's clothes in China has just reduced its operational expenses by 15% Correct. PC was reducing its operational costs to keep up with other markets-- if other markets-whom are presumably doing better than PC cut operational costs even more, then PC is back where they started and thus not competitive.
D. US consumers do not want to buy clothes manufactured offshore. Tempting because it seems to imply that the sales will not show an increase, but this is wrong because it assumes that the primary market for PC is in America. Because we do not know how their sales are measured--besides in comparison with other markets, we cannot choose D.
E. A large US manufacturer of childerens clothes plans to relocate is operations to China. Completely out of scope.

Kudos if this helped! :)
General Discussion
avatar
DexDee
Intern
Intern
Joined: 28 Sep 2011
Posts: 37
Own Kudos [?]: 102 [1]
Given Kudos: 15
Send PM
Re: Panda Corporation is a large American manufacurer of [#permalink] New post   Updated on: 09 Oct 2011, 05:02
1
Kudos
I pick C.

The offshore manufacturer ( a Chinese corp ) has also reduced the operational expenses by a similar percentage. Such a move will aggravate the pricing pressure to American manufacturers, beyond the compensatory action.

Originally posted by DexDee on 09 Oct 2011, 02:19.
Last edited by DexDee on 09 Oct 2011, 05:02, edited 1 time in total.
User avatar
L
carcass
Board of Directors
Joined: 01 Sep 2010
Posts: 4384
Own Kudos [?]: 32876 [1]
Given Kudos: 4455
Send PM
Re: Panda Corporation is a large American manufacurer of [#permalink] New post   09 Oct 2011, 04:56
1
Kudos
Straigth C in 15 second
User avatar
imaggic
Intern
Intern
Joined: 16 Aug 2011
Posts: 29
Own Kudos [?]: 16 [1]
Given Kudos: 3
Send PM
Re: Panda Corporation is a large American manufacurer of [#permalink] New post   13 Nov 2011, 22:25
1
Kudos
C
User avatar
crick20002002
Senior Manager
Senior Manager
Joined: 29 Aug 2010
Status:Prep started for the n-th time
Posts: 289
Own Kudos [?]: 538 [1]
Given Kudos: 37
Send PM
Re: Panda Corporation is a large American manufacurer of [#permalink] New post   14 Nov 2011, 00:24
1
Kudos
+1 for C.

Crick
User avatar
manalq8
Manager
Manager
Joined: 12 Apr 2011
Status:D-Day is on February 10th. and I am not stressed
Affiliations: American Management association, American Association of financial accountants
Posts: 118
Own Kudos [?]: 1850 [1]
Given Kudos: 52
Location: Kuwait
Concentration: finance and international business
Schools:Columbia university
 Q18  V17 GMAT 2: 320  Q18  V19 GMAT 3: 620  Q42  V33
GPA: 3.48
Send PM
Re: Panda Corporation is a large American manufacurer of [#permalink] New post   14 Nov 2011, 05:17
1
Kudos
straight C
User avatar
shrive555
Manager
Manager
Joined: 15 Sep 2010
Status:Do and Die!!
Posts: 207
Own Kudos [?]: 2134 [2]
Given Kudos: 193
 Q29  V6 GMAT 3: 430  Q31  V19
Send PM
Re: Panda Corporation is a large American manufacurer of [#permalink] New post   15 Nov 2011, 10:19
2
Kudos
prashantbacchewar wrote:
Panda Corporation is a large American manufacurer of children's clothing that has recently undertaken sharp measures to remain competitive in todays global market. In response to offshore pricing pressures, Panda Corporation laid off over 500 employees, reducing operational expenses by 18%. Since clothing manufacturers realize a one percentage point increase in sales margins for every five percentage point decrease in operational expenses, the Board of directors is satisfied that these measures will ensure Panda Corporation's long-term sustainability.
.


based on bold lines, what's wrong with D, if consumers do not buy cloths manufactured offshore, it will decrease sales, since sales and operational expenses are proportional, No matter what % of operational expenses is reduced,if sales is not increasing then sustainability of corporation can be questioned.
avatar
ravikrishna1979
Intern
Intern
Joined: 22 Jun 2016
Posts: 35
Own Kudos [?]: 12 [0]
Given Kudos: 4
Send PM
Re: Panda Corporation is a large American manufacurer of [#permalink] New post   15 Oct 2016, 15:36
TAL010 wrote:
shrive555 wrote:
prashantbacchewar wrote:
Panda Corporation is a large American manufacurer of children's clothing that has recently undertaken sharp measures to remain competitive in todays global market. In response to offshore pricing pressures, Panda Corporation laid off over 500 employees, reducing operational expenses by 18%. Since clothing manufacturers realize a one percentage point increase in sales margins for every five percentage point decrease in operational expenses, the Board of directors is satisfied that these measures will ensure Panda Corporation's long-term sustainability.
.


based on bold lines, what's wrong with D, if consumers do not buy cloths manufactured offshore, it will decrease sales, since sales and operational expenses are proportional, No matter what % of operational expenses is reduced,if sales is not increasing then sustainability of corporation can be questioned.




Lets go
I'll take a stab at explaining how I reached C as the final answer.

Panda Corporation is a large American manufacurer of children's clothing that has recently undertaken sharp measures to remain competitive in todays global market. In response to offshore pricing pressures, Panda Corporation laid off over 500 employees, reducing operational expenses by 18%. Since clothing manufacturers realize a one percentage point increase in sales margins for every five percentage point decrease in operational expenses, the Board of directors is satisfied that these measures will ensure Panda Corporation's long-term sustainability.

I understood the stimulus like so: Panda Corp is an American company that wants to stay competitve in the global market. PC believes the best course would be to cut operational costs. The board cuts operational costs by 18%-- knowing that every 5% cut corresponds with a 1% increase in sales. So basically they are expecting a 3%+ increase in sales.(margin = revenue - cost)

This is a weaken question - so we are looking for an answer that best attacks the stimulus.

Based on the passgae, which of the following, if true, would most weaken Board's stance?
A. Panda corporations main competitor is also an American manufacturer. Even if so, doesn't weaken or strenghten the argument whatsoever.
B. Panda corporations main competitor is based in China. Same as above. Doesn't deal with any questions why their plan will not work.
C. The largest manufacturer of children's clothes in China has just reduced its operational expenses by 15% Correct. PC was reducing its operational costs to keep up with other markets-- if other markets-whom are presumably doing better than PC cut operational costs even more, then PC is back where they started and thus not competitive.
D. US consumers do not want to buy clothes manufactured offshore. Tempting because it seems to imply that the sales will not show an increase, but this is wrong because it assumes that the primary market for PC is in America. Because we do not know how their sales are measured--besides in comparison with other markets, we cannot choose D.
E. A large US manufacturer of childerens clothes plans to relocate is operations to China. Completely out of scope.

Kudos if this helped! :)


with the same logic, but where does it mentioned that Chinese company has got market in US or the chinese largest manufacturing company is equivalent to that of US.It could be that chinese is much much smaller compared to that of US. Secondly there could be other largest market in Europe or in India where US company clothes can be sold.

I don't think this question atleast is valid for GMAT just by comparing US companies with that of Chinese even though in reality it might be right.
avatar
B
jayantheinstein
Intern
Intern
Joined: 29 Dec 2015
Posts: 7
Own Kudos [?]: 12 [1]
Given Kudos: 0
Send PM
Re: Panda Corporation is a large American manufacurer of [#permalink] New post   21 Oct 2016, 10:24
1
Kudos
ravikrishna1979

Please find the reply :-

Panda Corporation is a large American manufacurer of children's clothing that has recently undertaken sharp measures to remain competitive in Todays global market

Note the word "GLOBAL MARKET"

Today's global market here is implied as panda corporation's competition with a similar competitor in china.

so option c tells that :

The largest manufacturer of children's clothes in China has just reduced its operational expenses by 15%

This means that if the Chinese manufacturer employs a similar strategy as that of the panda corporation ,clearly sales margin of Chinese manufacturer will increase and hence the panda corporation cannot become more competitive globally.

Hope it makes sense.
avatar
B
onkargm
Intern
Intern
Joined: 26 Jan 2016
Posts: 48
Own Kudos [?]: 8 [0]
Given Kudos: 43
Location: India
Concentration: General Management, Statistics
Schools: ISB '18 HKU MBA"19 (II)
GMAT 1: 670 Q49 V31
GMAT 2: 730 Q49 V41
GPA: 3
WE:Information Technology (Computer Software)
Send PM
Re: Panda Corporation is a large American manufacurer of [#permalink] New post   28 Nov 2016, 04:33
How can a Global Clothes manufacturing company is affected by operational changes by a company in China, What if this "Global company" does not sell its products in China , and sells everywhere else apart from China. This question makes us assume that , the company in argument has a market in China, the information nowhere mentioned in the question. VeritasPrepKarishma can you please guide on this ?
avatar
B
bluetrain
Manager
Manager
Joined: 30 Aug 2017
Posts: 71
Own Kudos [?]: 18 [0]
Given Kudos: 250
Location: Korea, Republic of
Schools: Yale '20 INSEAD Jan'18
GMAT 1: 700 Q51 V31
GPA: 3.68
Send PM
Re: Panda Corporation is a large American manufacurer of [#permalink] New post   09 Nov 2017, 05:51
jayantheinstein wrote:
ravikrishna1979

Please find the reply :-

Panda Corporation is a large American manufacurer of children's clothing that has recently undertaken sharp measures to remain competitive in Todays global market

Note the word "GLOBAL MARKET"

Today's global market here is implied as panda corporation's competition with a similar competitor in china.

so option c tells that :

The largest manufacturer of children's clothes in China has just reduced its operational expenses by 15%

This means that if the Chinese manufacturer employs a similar strategy as that of the panda corporation ,clearly sales margin of Chinese manufacturer will increase and hence the panda corporation cannot become more competitive globally.

Hope it makes sense.






ravikrishna1979

In addition to explanation above


Yes, partially your argument seems reasonable.

But, the reason why the company cut off their expenses is to keep their competitive advantage.


Therefore, C is better option.
User avatar
B
frankgraves
Intern
Intern
Joined: 15 Dec 2020
Posts: 36
Own Kudos [?]: 19 [0]
Given Kudos: 19
Send PM
Re: Panda Corporation is a large American manufacurer of [#permalink] New post   13 Aug 2021, 02:07
prashantbacchewar wrote:
Panda Corporation is a large American manufacurer of children's clothing that has recently undertaken sharp measures to remain competitive in todays global market. In response to offshore pricing pressures, Panda Corporation laid off over 500 employees, reducing operational expenses by 18%. Since clothing manufacturers realize a one percentage point increase in sales margins for every five percentage point decrease in operational expenses, the Board of directors is satisfied that these measures will ensure Panda Corporation's long-term sustainability.

Based on the passage, which of the following, if true, would most weaken Board's stance?

A. Panda corporations main competitor is also an American manufacturer.
B. Panda corporations main competitor is based in China.
C. The largest manufacturer of children's clothes in China has just reduced its operational expenses by 15%
D. US consumers do not want to buy clothes manufactured offshore.
E. A large US manufacturer of childeren's clothes plans to relocate its operations to China.


Sorry but I think this is a strong GMAT question.
The OA is C under the reason that if the largest manufacturer in China also uses the same strategy than Panda will not be competitive.
So 15% expense reduction will translate into 5% increase in sales margin, compared to 6% increase by Panda.
The question is : How can this become a threat for Panda competitiveness?
We do not know the sales margin of Panda and the China corporation before the cut.
Hence, we cannot conclude whether the operational expense cut by China corporation will kick Panda out of competition.
Please advise if you have different opinion.
User avatar
VerbalBot
Non-Human User
Joined: 01 Oct 2013
Posts: 17222
Own Kudos [?]: 848 [0]
Given Kudos: 0
Send PM
Re: Panda Corporation is a large American manufacurer of [#permalink] New post   24 Jul 2023, 19:15
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
GMAT Club Bot
gmatclubot
Re: Panda Corporation is a large American manufacurer of [#permalink]
24 Jul 2023, 19:15
Moderators:
GMATNinja
GMAT Club Verbal Expert
6920 posts
GMATNinjaTwo
GMAT Club Verbal Expert
238 posts
mysterymanrog
CR Forum Moderator
832 posts

Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne
Main navigation
GMAT Resources
Partners
MBA Resources
www.gmac.com|www.mba.com | | GMAT Club Rules | Terms and Conditions