Purchasing can have a significant effect on an organization : GMAT Critical Reasoning (CR)
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# Purchasing can have a significant effect on an organization

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08 May 2011, 23:47
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Question Stats:

57% (01:41) correct 43% (01:31) wrong based on 4 sessions

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1. Purchasing can have a significant effect on an organization’s total profit. However, the success of a purchasing function
technological advances. If an organization’s profitability is in jeopardy, the efficiency and skill of its purchasing function
may determine whether it operates at a profit or at a loss. As such, the purchasing function bears a significant amount of
the responsibility for an organization’s profit, and, whenever an organization strives to produce profit, it will expend the
effort required to hire capable and qualified buyers as well as a knowledgeable, intelligent purchasing manager.

From the information given above, it can be validly concluded that:

A. If an organization’s profitability is not in jeopardy then the competence of its purchasing function will not determine
whether it operates at a profit or at a loss.

B. There are at least some purchasing functions that are not responsible for a significant amount of an organization’s
profit.

C. A non-purchasing function will not bear significant responsibility for the profit of an organization.

D. An organization whose profitability is in jeopardy may depend on the efficiency and skill of its purchasing function to
determine whether it operates at a profit or at a loss.

2. In order for an organization to survive, it must satisfy several different groups of stakeholders. Stakeholders typically
include stockholders, employees, customers, and society in general. Unfortunately, the desires of stakeholder groups are
often in conflict. In the long run, the desires of all of these groups must be satisfied adequately by the organization, or
none of them will be satisfied at all. This is because any one of these groups is strong enough to cause the downfall of
the organization if their desires are not satisfied. When an organization operates within a single country, balancing the
competing desires of stakeholder groups is sometimes difficult. For those organizations that operate across multiple
countries, where dominant interests often vary widely, balancing these competing desires is always difficult.

From the information given above, it can be validly concluded that:

A. If an organization experiences difficulty balancing the competing desires of stakeholder groups then it is almost
certain that the organization operates across multiple countries.

B. No organization that is able to survive can do so without satisfying the desires of several different stakeholder groups.

C. There are at least some organizations that operate across multiple countries but do not experience difficulty
balancing the competing desires of stakeholder groups.

D. No organization that satisfies the desires of all its stakeholders will fail to survive.

3. Mechanization is defined as the process of using machines to perform work that had previously been performed by
people. Automation, which is an extension of mechanization, is defined as the process of performing mechanical
operations with minimal or no human involvement. Automation is commonly used whenever an organization faces
difficulties producing a product of a consistent quality, as well as when work is monotonous or unsafe for employees.
Automation systems can be either hard or soft. Soft automation systems are adaptable, thus allowing them to perform
several different functions. Hard automation systems have each machine perform one specific function. As a result,
these systems are less adaptable than soft automation systems.

From the information given above, it can be validly concluded that:

A. There are at least some automated systems that require considerable human involvement to perform mechanical
operations

B. If an organization can consistently produce a high quality product, it is unlikely that it will use an automated system.

C. No hard automation system is more adaptable than a soft automation system.

D. Any organization that uses an automated system has found its work to be monotonous or unsafe for employees.

Official Answers are D , B , and C respectively.

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Purchasing can have a significant effect on an organization   [#permalink] 08 May 2011, 23:47
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