A.

If the rival manufacturers also discount their vehicles prices then the plan fails.
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GMAT 1- 770(Q 51 V44)
cya ISB in 2013 !!

for D the discounts cut into profits is mentioned agreed . . but what if company starts making loss and get closed before reaping advantages of loyal customers later on . .

Whether the automaker will be able to cut costs
sufficiently to maintain profit margins . .thats the question which is not mentioned in the stimulus. .
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(A) Whether the automaker's competitors are likely to respond by offering deep discounts on their own products

The plan is to offer such low prices as to lure customers away from competitors. However, if competitors counter by also lowering the prices of their cars, then consumers no longer have an incentive to switch to the 'certain automaker'. Thus (A) is the answer.

(E) Whether an alternative strategy might enable the automaker to enhance its profitability while holding a constant or diminishing share of the market

We are only focusing on the strategy of lowering the price of cars. Will it work or not? Saying that an alternative strategy may be more effective does not answer this question.
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Christopher Lele
Magoosh Test Prep

Pls help in eliminating E.

It talks of an alternative strategy. But I think the effectiveness of it is not discussed.
Am i true

I was not asking to eliminate C... I know thats not affecting the plan but i had confusion with E

it is an Evaluate the Argument question, and by applying Variance Test, it comes down to answer choice A.

the conclusion states " A certain automaker aims to increase its market share
by deeply discounting its vehicles' prices for the next
several months "

(A) Whether the automaker's competitors are likely
to respond by offering deep discounts on their
own products

applying the variance test

IF YES : if competitors respond in the same way, the automaker's strategy will not have much effect in customers.

IF NO: if competitors do not respond in the same way, then the automaker's strategy will have great probability of success.
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لا الله الا الله, محمد رسول الله


You never fail until you stop trying ,,,

A it is , If other competitors apply for the same discounts then this company will lose its edge over competition.
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IF IT IS TO BE , IT IS UP TO ME

OG2017 CR558 P514

Discounted Vehicles

Step 1: Identify the Question

This question asks which answer would be most useful to know in assessing the plan, so this is an Evaluate the Argument question.

Step 2: Deconstruct the Argument

Discounts → increase MS
But drop in profit
© create loyal cust
Note: MS is an abbreviation for market share.
 
Step 3: Pause and State the Goal

This argument presents a plan, and all steps of the plan must work for the plan to achieve its aim. Do any specific aspects of the plan seem questionable or unlikely to work? On Evaluate questions, the answer should be something that is important to know to decide if the plan will in fact work as stated in the argument.

Step 4: Work from Wrong to Right

(A) CORRECT. If competitors cut prices in response, the automaker is unlikely to gain much market share from its price cuts, weakening the argument. If competitors would not respond in this way, at least the first step of the plan is more likely to work (price cuts lead to gains in market share), strengthening the argument.
(B) In order for the plan to work the advertising campaign must attract buyers, but the advertising agency that creates these ads is not relevant.
(C) In order for the plan to work, the discounts must attract customers. The relationship between the levels of discounts on different models of cars, however, does not address whether the discounts will be effective.
(D) The argument acknowledges that the plan will initially cut into profits; the plan focuses on increasing long-term profits. Whether the company is able to maintain short-term profits through cost cuts is thus not important to the success of the stated plan.
(E) This question asks about the specific plan in the argument achieving its aim. Other plans to improve profitability are not relevant.
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D is in correct but the seller is focused on increasing sales and not profits.

if the competitor brings in discounts also, this sales and thereby his MS would not increase