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# Since the late 1970's, in the face of a severe loss of

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Manager
Joined: 07 Feb 2010
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Kudos [?]: 429 [1] , given: 101

Since the late 1970's, in the face of a severe loss of [#permalink]

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29 Nov 2010, 19:54
1
KUDOS
Since the late 1970’s, in the face of a severe loss of market share in dozens of industries, manufacturers in the United States have been trying to improve productivity—and therefore enhance their international competitiveness—through cost-cutting programs. (Cost-cutting here is defined as raising labor output while holding the amount of labor constant.) However, from 1978 through 1982, productivity—the value of goods manufactured divided by the amount of labor input—did not improve; and while the results were better in the business upturn of the three years following, they ran 25 percent lower than productivity improvements during earlier, post-1945 upturns. At the same time, it became clear that the harder manufactures worked to implement cost-cutting, the more they lost their competitive edge.
With this paradox in mind, I recently visited 25 companies; it became clear to me that the cost-cutting approach to increasing productivity is fundamentally flawed. Manufacturing regularly observes a “40, 40, 20” rule. Roughly 40 percent of any manufacturing-based competitive advantage derives from long-term changes in manufacturing structure (decisions about the number, size, location, and capacity of facilities) and in approaches to materials. Another 40 percent comes from major changes in equipment and process technology. The final 20 percent rests on implementing conventional cost-cutting. This rule does not imply that cost-cutting should not be tried. The well-known tools of this approach—including simplifying jobs and retraining employees to work smarter, not harder—do produce results. But the tools quickly reach the limits of what they can contribute.
Another problem is that the cost-cutting approach hinders innovation and discourages creative people. As Abernathy’s study of automobile manufacturers has shown, an industry can easily become prisoner of its own investments in cost-cutting techniques, reducing its ability to develop new products. And managers under pressure to maximize cost-cutting will resist innovation because they know that more fundamental changes in processes or systems will wreak havoc with the results on which they are measured. Production managers have always seen their job as one of minimizing costs and maximizing output. This dimension of performance has until recently sufficed as a basis of evaluation, but it has created a penny-pinching, mechanistic culture in most factories that has kept away creative managers.
Every company I know that has freed itself from the paradox has done so, in part, by developing and implementing a manufacturing strategy. Such a strategy focuses on the manufacturing structure and on equipment and process technology. In one company a manufacturing strategy that allowed different areas of the factory to specialize in different markets replaced the conventional cost-cutting approach; within three years the company regained its competitive advantage. Together with such strategies, successful companies are also encouraging managers to focus on a wider set of objectives besides cutting costs. There is hope for manufacturing, but it clearly rests on a different way of managing.
1. The author of the passage is primarily concerned with
(A) summarizing a thesis
(B) recommending a different approach
(C) comparing points of view
(D) making a series of predictions
(E) describing a number of paradoxes
2. It can be inferred from the passage that the manufacturers mentioned in line 2
expected that the measures they implemented would
(A) encourage innovation
(B) keep labor output constant
(D) permit business upturns to be more easily predicted
(E) cause managers to focus on a wider set of objectives
3. The primary function of the first paragraph of the passage is to
(A) outline in brief the author’s argument
(B) anticipate challenges to the prescriptions that follow
(C) clarify some disputed definitions of economic terms
(D) summarize a number of long-accepted explanations
(E) present a historical context for the author’s observations
4. The author refers to Abernathy’s study (line 36) most probably in order to
(A) qualify an observation about one rule governing manufacturing
(C) support an earlier assertion about one method of increasing productivity
(D) suggest the centrality in the United States economy of a particular manufacturing industry
(E) given an example of research that has questioned the wisdom of revising a manufacturing strategy
5. The author’s attitude toward the culture in most factories is best described as
(A) cautious
(B) critical
(C) disinterested
(D) respectful
6. In the passage, the author includes all of the following EXCEPT
(A) personal observation
(C) a definition of productivity
(D) an example of a successful company
(E) an illustration of a process technology
7. The author suggests that implementing conventional cost-cutting as a way of increasing manufacturing competitiveness is a strategy that is
(A) flawed and ruinous
(B) shortsighted and difficult to sustain
(C) popular and easily accomplished
(E) misunderstood but promising
Manager
Joined: 07 Feb 2010
Posts: 159
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Kudos [?]: 429 [0], given: 101

Re: mass of market share [#permalink]

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29 Nov 2010, 19:55
oa will be provided after an explanation

VP
Status: There is always something new !!
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Kudos [?]: 209 [0], given: 10

Re: mass of market share [#permalink]

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30 Nov 2010, 00:20
anilnandyala wrote:
Since the late 1970’s, in the face of a severe loss of market share in dozens of industries, manufacturers in the United States have been trying to improve productivity—and therefore enhance their international competitiveness—through cost-cutting programs. (Cost-cutting here is defined as raising labor output while holding the amount of labor constant.) However, from 1978 through 1982, productivity—the value of goods manufactured divided by the amount of labor input—did not improve; and while the results were better in the business upturn of the three years following, they ran 25 percent lower than productivity improvements during earlier, post-1945 upturns. At the same time, it became clear that the harder manufactures worked to implement cost-cutting, the more they lost their competitive edge.
With this paradox in mind, I recently visited 25 companies; it became clear to me that the cost-cutting approach to increasing productivity is fundamentally flawed. Manufacturing regularly observes a “40, 40, 20” rule. Roughly 40 percent of any manufacturing-based competitive advantage derives from long-term changes in manufacturing structure (decisions about the number, size, location, and capacity of facilities) and in approaches to materials. Another 40 percent comes from major changes in equipment and process technology. The final 20 percent rests on implementing conventional cost-cutting. This rule does not imply that cost-cutting should not be tried. The well-known tools of this approach—including simplifying jobs and retraining employees to work smarter, not harder—do produce results. But the tools quickly reach the limits of what they can contribute.
Another problem is that the cost-cutting approach hinders innovation and discourages creative people. As Abernathy’s study of automobile manufacturers has shown, an industry can easily become prisoner of its own investments in cost-cutting techniques, reducing its ability to develop new products. And managers under pressure to maximize cost-cutting will resist innovation because they know that more fundamental changes in processes or systems will wreak havoc with the results on which they are measured. Production managers have always seen their job as one of minimizing costs and maximizing output. This dimension of performance has until recently sufficed as a basis of evaluation, but it has created a penny-pinching, mechanistic culture in most factories that has kept away creative managers.
Every company I know that has freed itself from the paradox has done so, in part, by developing and implementing a manufacturing strategy. Such a strategy focuses on the manufacturing structure and on equipment and process technology. In one company a manufacturing strategy that allowed different areas of the factory to specialize in different markets replaced the conventional cost-cutting approach; within three years the company regained its competitive advantage. Together with such strategies, successful companies are also encouraging managers to focus on a wider set of objectives besides cutting costs. There is hope for manufacturing, but it clearly rests on a different way of managing.
1. The author of the passage is primarily concerned with
(A) summarizing a thesis - POE
(B) recommending a different approach - Correct Final Para
(C) comparing points of view - none mentioned
(D) making a series of predictions - POE
(E) describing a number of paradoxes - POE

2. It can be inferred from the passage that the manufacturers mentioned in line 2
expected that the measures they implemented would
(A) encourage innovation - POE
(B) keep labor output constant - Not intended
(C) increase their competitive advantage - Mentioned in Line 2 correct
(D) permit business upturns to be more easily predicted - POE
(E) cause managers to focus on a wider set of objectives - POE

3. The primary function of the first paragraph of the passage is to
(A) outline in brief the author’s argument - Correct rest all POE
(B) anticipate challenges to the prescriptions that follow
(C) clarify some disputed definitions of economic terms
(D) summarize a number of long-accepted explanations
(E) present a historical context for the author’s observations

4. The author refers to Abernathy’s study (line 36) most probably in order to
(A) qualify an observation about one rule governing manufacturing - Cost cuttings isn't rule - POE
(B) address possible objections to a recommendation about improving manufacturing competitiveness - Correct
(C) support an earlier assertion about one method of increasing productivity - POE
(D) suggest the centrality in the United States economy of a particular manufacturing industry - POE
(E) given an example of research that has questioned the wisdom of revising a manufacturing strategy - Its not questioning it,rather its intention is to revise. POE

5. The author’s attitude toward the culture in most factories is best described as
(A) cautious - Correct Para 3rd and 4th
(B) critical - POE
(C) disinterested - POE
(D) respectful - No intention

6. In the passage, the author includes all of the following EXCEPT
(A) personal observation - Last para
(B) a business principle - Cost cutting itself
(C) a definition of productivity - first para
(D) an example of a successful company - Last Para
(E) an illustration of a process technology - None mentioned Correct

7. The author suggests that implementing conventional cost-cutting as a way of increasing manufacturing competitiveness is a strategy that is
(A) flawed and ruinous - Correct Runious because of 2nd line in Para 3rd
(B) shortsighted and difficult to sustain - Unable to eliminate
(C) popular and easily accomplished - POE
(D) useful but inadequate - POE
(E) misunderstood but promising - POE

The answers and explainations are embedded.
Good RC, Anil.
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Manager
Joined: 23 Oct 2010
Posts: 87
Location: India
Followers: 3

Kudos [?]: 26 [0], given: 6

Re: mass of market share [#permalink]

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01 Dec 2010, 02:26
B
C
A
C
B
B
d

Posted from my mobile device
Senior Manager
Joined: 16 Jul 2009
Posts: 261
Followers: 5

Kudos [?]: 247 [0], given: 3

Re: mass of market share [#permalink]

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01 Dec 2010, 11:35
1.B
2.C
3.E
4.A
5.B
6.E
7.B
Manager
Joined: 19 Sep 2010
Posts: 184
Followers: 2

Kudos [?]: 79 [0], given: 18

Re: mass of market share [#permalink]

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06 Dec 2010, 10:58
1. B
2. C
3. E
4. B
5. B
6. E
7. D
Senior Manager
Joined: 30 Nov 2010
Posts: 263
Schools: UC Berkley, UCLA
Followers: 1

Kudos [?]: 77 [0], given: 66

Re: mass of market share [#permalink]

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10 Dec 2010, 09:15
B, B, D, E, B, E, A - That's what I got 15 mins later
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Thank you for your kudoses Everyone!!!

"It always seems impossible until its done."
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Senior Manager
Affiliations: CFA Level 2
Joined: 05 May 2004
Posts: 266
Location: Hanoi
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Kudos [?]: 64 [0], given: 0

Re: mass of market share [#permalink]

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14 Dec 2010, 00:02
B,C,E,E,B,B,B are my answers in 10 mins and 30 seconds. Wait for the OA
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Joined: 21 Aug 2009
Posts: 55
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Kudos [?]: 10 [0], given: 19

Re: mass of market share [#permalink]

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14 Dec 2010, 00:51
BCAEBEB 11.30 min
Senior Manager
Status: swimming against the current
Joined: 24 Jul 2009
Posts: 252
Location: Chennai, India
Followers: 4

Kudos [?]: 82 [0], given: 30

Re: mass of market share [#permalink]

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14 Dec 2010, 10:05
c
e
a
b
e
b

Time taken 6.50 mins
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Gonna make it this time

Last edited by mailnavin1 on 14 Dec 2010, 10:07, edited 1 time in total.
Senior Manager
Status: swimming against the current
Joined: 24 Jul 2009
Posts: 252
Location: Chennai, India
Followers: 4

Kudos [?]: 82 [0], given: 30

Re: mass of market share [#permalink]

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14 Dec 2010, 10:06
This is from 1000 RC. OA's are
[Reveal] Spoiler:
bcecbed

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Manager
Joined: 02 Oct 2010
Posts: 158
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Kudos [?]: 33 [0], given: 29

Re: mass of market share [#permalink]

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19 Dec 2010, 21:37
mailnavin1 wrote:
c
e
a
b
e
b

Time taken 6.50 mins

I got the same answers and time taken was 8 mins.
Current Student
Joined: 06 Sep 2013
Posts: 2035
Concentration: Finance
GMAT 1: 770 Q0 V
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Re: Since the late 1970's, in the face of a severe loss of [#permalink]

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16 Oct 2013, 06:30
anilnandyala wrote:
Since the late 1970’s, in the face of a severe loss of market share in dozens of industries, manufacturers in the United States have been trying to improve productivity—and therefore enhance their international competitiveness—through cost-cutting programs. (Cost-cutting here is defined as raising labor output while holding the amount of labor constant.) However, from 1978 through 1982, productivity—the value of goods manufactured divided by the amount of labor input—did not improve; and while the results were better in the business upturn of the three years following, they ran 25 percent lower than productivity improvements during earlier, post-1945 upturns. At the same time, it became clear that the harder manufactures worked to implement cost-cutting, the more they lost their competitive edge.
With this paradox in mind, I recently visited 25 companies; it became clear to me that the cost-cutting approach to increasing productivity is fundamentally flawed. Manufacturing regularly observes a “40, 40, 20” rule. Roughly 40 percent of any manufacturing-based competitive advantage derives from long-term changes in manufacturing structure (decisions about the number, size, location, and capacity of facilities) and in approaches to materials. Another 40 percent comes from major changes in equipment and process technology. The final 20 percent rests on implementing conventional cost-cutting. This rule does not imply that cost-cutting should not be tried. The well-known tools of this approach—including simplifying jobs and retraining employees to work smarter, not harder—do produce results. But the tools quickly reach the limits of what they can contribute.
Another problem is that the cost-cutting approach hinders innovation and discourages creative people. As Abernathy’s study of automobile manufacturers has shown, an industry can easily become prisoner of its own investments in cost-cutting techniques, reducing its ability to develop new products. And managers under pressure to maximize cost-cutting will resist innovation because they know that more fundamental changes in processes or systems will wreak havoc with the results on which they are measured. Production managers have always seen their job as one of minimizing costs and maximizing output. This dimension of performance has until recently sufficed as a basis of evaluation, but it has created a penny-pinching, mechanistic culture in most factories that has kept away creative managers.
Every company I know that has freed itself from the paradox has done so, in part, by developing and implementing a manufacturing strategy. Such a strategy focuses on the manufacturing structure and on equipment and process technology. In one company a manufacturing strategy that allowed different areas of the factory to specialize in different markets replaced the conventional cost-cutting approach; within three years the company regained its competitive advantage. Together with such strategies, successful companies are also encouraging managers to focus on a wider set of objectives besides cutting costs. There is hope for manufacturing, but it clearly rests on a different way of managing.
1. The author of the passage is primarily concerned with
(A) summarizing a thesis
(B) recommending a different approach
(C) comparing points of view
(D) making a series of predictions
(E) describing a number of paradoxes
2. It can be inferred from the passage that the manufacturers mentioned in line 2
expected that the measures they implemented would
(A) encourage innovation
(B) keep labor output constant
(D) permit business upturns to be more easily predicted
(E) cause managers to focus on a wider set of objectives
3. The primary function of the first paragraph of the passage is to
(A) outline in brief the author’s argument
(B) anticipate challenges to the prescriptions that follow
(C) clarify some disputed definitions of economic terms
(D) summarize a number of long-accepted explanations
(E) present a historical context for the author’s observations
4. The author refers to Abernathy’s study (line 36) most probably in order to
(A) qualify an observation about one rule governing manufacturing
(C) support an earlier assertion about one method of increasing productivity
(D) suggest the centrality in the United States economy of a particular manufacturing industry
(E) given an example of research that has questioned the wisdom of revising a manufacturing strategy
5. The author’s attitude toward the culture in most factories is best described as
(A) cautious
(B) critical
(C) disinterested
(D) respectful
6. In the passage, the author includes all of the following EXCEPT
(A) personal observation
(C) a definition of productivity
(D) an example of a successful company
(E) an illustration of a process technology
7. The author suggests that implementing conventional cost-cutting as a way of increasing manufacturing competitiveness is a strategy that is
(A) flawed and ruinous
(B) shortsighted and difficult to sustain
(C) popular and easily accomplished
(E) misunderstood but promising

First, question 4.

How are A and C answer choices much different? They sound pretty similar to me. Would someone please elaborate on this one?

Then question 6.
Is there really an example of a successful company in the passage? Cause it's the third time I read it and I haven't able to find it

Thanks
Will provide Kudos to good analysis
Cheers
J
Intern
Joined: 25 May 2014
Posts: 23
GPA: 3.55
Followers: 0

Kudos [?]: 2 [0], given: 13

Re: Since the late 1970's, in the face of a severe loss of [#permalink]

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08 Oct 2014, 07:38
jlgdr wrote:
anilnandyala wrote:
Since the late 1970’s, in the face of a severe loss of market share in dozens of industries, manufacturers in the United States have been trying to improve productivity—and therefore enhance their international competitiveness—through cost-cutting programs. (Cost-cutting here is defined as raising labor output while holding the amount of labor constant.) However, from 1978 through 1982, productivity—the value of goods manufactured divided by the amount of labor input—did not improve; and while the results were better in the business upturn of the three years following, they ran 25 percent lower than productivity improvements during earlier, post-1945 upturns. At the same time, it became clear that the harder manufactures worked to implement cost-cutting, the more they lost their competitive edge.
With this paradox in mind, I recently visited 25 companies; it became clear to me that the cost-cutting approach to increasing productivity is fundamentally flawed. Manufacturing regularly observes a “40, 40, 20” rule. Roughly 40 percent of any manufacturing-based competitive advantage derives from long-term changes in manufacturing structure (decisions about the number, size, location, and capacity of facilities) and in approaches to materials. Another 40 percent comes from major changes in equipment and process technology. The final 20 percent rests on implementing conventional cost-cutting. This rule does not imply that cost-cutting should not be tried. The well-known tools of this approach—including simplifying jobs and retraining employees to work smarter, not harder—do produce results. But the tools quickly reach the limits of what they can contribute.
Another problem is that the cost-cutting approach hinders innovation and discourages creative people. As Abernathy’s study of automobile manufacturers has shown, an industry can easily become prisoner of its own investments in cost-cutting techniques, reducing its ability to develop new products. And managers under pressure to maximize cost-cutting will resist innovation because they know that more fundamental changes in processes or systems will wreak havoc with the results on which they are measured. Production managers have always seen their job as one of minimizing costs and maximizing output. This dimension of performance has until recently sufficed as a basis of evaluation, but it has created a penny-pinching, mechanistic culture in most factories that has kept away creative managers.
Every company I know that has freed itself from the paradox has done so, in part, by developing and implementing a manufacturing strategy. Such a strategy focuses on the manufacturing structure and on equipment and process technology. In one company a manufacturing strategy that allowed different areas of the factory to specialize in different markets replaced the conventional cost-cutting approach; within three years the company regained its competitive advantage. Together with such strategies, successful companies are also encouraging managers to focus on a wider set of objectives besides cutting costs. There is hope for manufacturing, but it clearly rests on a different way of managing.
1. The author of the passage is primarily concerned with
(A) summarizing a thesis
(B) recommending a different approach
(C) comparing points of view
(D) making a series of predictions
(E) describing a number of paradoxes
2. It can be inferred from the passage that the manufacturers mentioned in line 2
expected that the measures they implemented would
(A) encourage innovation
(B) keep labor output constant
(D) permit business upturns to be more easily predicted
(E) cause managers to focus on a wider set of objectives
3. The primary function of the first paragraph of the passage is to
(A) outline in brief the author’s argument
(B) anticipate challenges to the prescriptions that follow
(C) clarify some disputed definitions of economic terms
(D) summarize a number of long-accepted explanations
(E) present a historical context for the author’s observations
4. The author refers to Abernathy’s study (line 36) most probably in order to
(A) qualify an observation about one rule governing manufacturing
(C) support an earlier assertion about one method of increasing productivity
(D) suggest the centrality in the United States economy of a particular manufacturing industry
(E) given an example of research that has questioned the wisdom of revising a manufacturing strategy
5. The author’s attitude toward the culture in most factories is best described as
(A) cautious
(B) critical
(C) disinterested
(D) respectful
6. In the passage, the author includes all of the following EXCEPT
(A) personal observation
(C) a definition of productivity
(D) an example of a successful company
(E) an illustration of a process technology
7. The author suggests that implementing conventional cost-cutting as a way of increasing manufacturing competitiveness is a strategy that is
(A) flawed and ruinous
(B) shortsighted and difficult to sustain
(C) popular and easily accomplished
(E) misunderstood but promising

First, question 4.

How are A and C answer choices much different? They sound pretty similar to me. Would someone please elaborate on this one?

Then question 6.
Is there really an example of a successful company in the passage? Cause it's the third time I read it and I haven't able to find it

Thanks
Will provide Kudos to good analysis
Cheers
J

Question #4:

"(C) support an earlier assertion about one method of increasing productivity" is the correct answer.

Refer to these two sentences:
"Another problem is that the cost-cutting approach hinders innovation and discourages creative people. As Abernathy’s study of automobile manufacturers has shown, an industry can easily become prisoner of its own investments in cost-cutting techniques, reducing its ability to develop new products."

"Earlier assertion" precisely refers to the entire preceding sentence, "Another problem...." This sentence is an assertion as the author gives his own opinions by claiming that the cost-cutting approach hinders innovation and discourages creative people.

"One method" refers to the "cost-cutting approach."

Question #6:

Example of a successful company, refer to these lines:

"$$In one company$$a manufacturing strategy that allowed different areas of the factory to specialize in different markets replaced the conventional cost-cutting approach; within three years the company regained its competitive advantage. Together with such strategies, successful companies are also encouraging managers to focus on a wider set of objectives besides cutting costs. "

By singling out "one company," the author provided an example. Why can we infer that the company was successful? First, because this company regained its competitive advantage -- this implies that it succeeded in achieving its goal. Second, to reinforce the "successful" modifier, the author proceeded by saying, "successful companies are also..." which logically refers back to the aforementioned example.
Re: Since the late 1970's, in the face of a severe loss of   [#permalink] 08 Oct 2014, 07:38
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