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Recent years have brought minority-owned businesses in the

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Recent years have brought minority-owned businesses in the [#permalink] New post 24 Feb 2005, 00:38
Recent years have brought minority-owned businesses in the United States unprecedented opportunities—as well as new and significant risks. Civil rights activists have long argued that one of the principal reasons why Blacks, Hispanics, and other minority groups have difficulty establishing themselves in business is that they lack access to the sizable orders and subcontracts that are generated by large companies. Now Congress, in apparent agreement, has required by law that businesses awarded federal contracts of more than $500,000 do their best to find minority subcontractors and record their efforts to do so on forms filed with the government. Indeed, some federal and local agencies have gone so far as to set specific percentage goals for apportioning parts of public works contracts to minority enterprises.

Corporate response appears to have been substantial. According to figures collected in 1977, the total of corporate contracts with minority businesses rose from $77 million in 1972 to $1.1 billion in 1977. The projected total of corporate contracts with minority businesses for the early 1980’s is estimated to be over 53 billion per year with no letup anticipated in the next decade. Promising as it is for minority businesses, this increased patronage poses dangers for them, too. First, minority firms risk expanding too fast and overextending themselves financially, since most are small concerns and, unlike large businesses, they often need to make substantial investments in new plants, staff, equipment, and the like in order to perform work subcontracted to them. If, thereafter, their subcontracts are for some reason reduced, such firms can face potentially crippling fixed expenses. The world of corporate purchasing can be frustrating for small entrepreneurs who get requests for elaborate formal estimates and bids. Both consume valuable time and resources, and a small company’s efforts must soon result in orders, or both the morale and the financial health of the business will suffer.
A second risk is that White-owned companies may seek to cash in on the increasing apportionments through formation of joint ventures with minority-owned concerns. Of course, in many instances there are legitimate reasons for joint ventures; clearly, White and minority enterprises can team up to acquire business that neither could acquire alone. But civil rights groups and minority business owners have complained to Congress about minorities being set up as “frontsâ€
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Re: RC--minority-owned business [#permalink] New post 25 Feb 2005, 00:03
1 it was discusses here: http://www.gmatclub.com/phpbb/viewforum ... &start=150

2 (B) more specific

3 (B) Between 1970 and 1972, corporate contracts with minority-owned businesses declined by 25 percent.
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 [#permalink] New post 25 Feb 2005, 06:33
I am not sure if question 1 is complete, but anyway here is my take
1. C
2. C
3. B
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 [#permalink] New post 25 Feb 2005, 10:37
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 [#permalink] New post 25 Feb 2005, 10:51
ABB
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 [#permalink] New post 25 Feb 2005, 19:11
Thanks

The OA is A, B, E

Could anyone explain the first question?
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 [#permalink] New post 25 Feb 2005, 21:26
chunjuwu wrote:
Thanks

The OA is A, B, E

Could anyone explain the first question?


Yes, stem says that when potential orders r not realized into real ones, small companies will face gr8 risk, unlike big companies. Choice "B" is there to throw ppl off, as the stem says that abt the small companies and not for the big one.

For the 3rd ques, I was bet B and E, and chose B. Still not sure bet B and E. Anyone with explanation ? Only thing I can think off is that author makes comparison abt 1972 and 1977 and not 1970 and 1972 in the stem. However, the ques is abt 70s and not specific yrs. :?:
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 [#permalink] New post 25 Feb 2005, 22:40
The passage says that the total dollar amount has increased from 1972's 77m to 1977's 1.1b. (B) says the contract had declined 25% from 1970-1972. It is likely that the positive response really come after 1972 and the positive trend has clearly more than offsetted the earlier declining. (It was a 50% increase from 72-77.) I would still call it a substantial response. (E) says, however, even if the dollar amount seems to have increased, its only reason is that total spending has increased and the corporates has not put any more emphasis to minority business at all since they have merely maintained the same percentage of spending that were allocated to the minority business.
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 [#permalink] New post 26 Feb 2005, 15:41
HongHu wrote:
The passage says that the total dollar amount has increased from 1972's 77m to 1977's 1.1b. (B) says the contract had declined 25% from 1970-1972. It is likely that the positive response really come after 1972 and the positive trend has clearly more than offsetted the earlier declining. (It was a 50% increase from 72-77.) I would still call it a substantial response. (E) says, however, even if the dollar amount seems to have increased, its only reason is that total spending has increased and the corporates has not put any more emphasis to minority business at all since they have merely maintained the same percentage of spending that were allocated to the minority business.


But from the same token, we can say that from 1977, 78, 79 the % increased substantially making the collective spending in 70s quite high. Ques is talking abt entire 70s and not just 2 yrs, I think both B and E fall short of explaining the trend for 70s in entirety ?
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Re: RC--minority-owned business [#permalink] New post 26 Feb 2005, 21:03
Assertion: Corporate response appears to have been substantial. Evidence: According to figures collected in 1977, the total of corporate contracts with minority businesses rose from $77 million in 1972 to $1.1 billion in 1977.
Ask for weakening:

(A) Corporate contracts with minority-owned businesses totaled $2 billion in 1979.
This actually strengthens the assertion.

(B) Between 1970 and 1972, corporate contracts with minority-owned businesses declined by 25 percent.
The entire decade can still be a substantial response, even if the initial couple years wasn't that good. It weakens some, but not the best.

(C) The figures collected in 1977 underrepresented the extent of corporate contracts with minority-owned businesses.
It strengthens the assertion.

(D) The estimate of corporate spending with minority-owned businesses in 1980 is approximately $10 million too high.
Says nothing about the assertion as well as the evidence. We have no idea about 1980's spending except a projection (meaning it was not 1980 yet), but the assertion is not based upon it at all. Irrelavent.

(E) The $1.1 billion represented the same percentage of total corporate spending in 1977 as did $77 million in 1972.
Directly attack the evidence. If the evidence is not right then the whole assertion is not supported.

You can see baner that our only choices are B and E, and clearly E is better than B.

You concern about the last two years may or may not be valid. However, it is not present in any of the choices, so we don't have to consider it since we can only work in the range of given choices.
Re: RC--minority-owned business   [#permalink] 26 Feb 2005, 21:03
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