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Updated on: 02 Oct 2023, 23:05
Originally posted by Sajjad1994 on 05 Mar 2022, 08:00.
Last edited by BottomJee on 02 Oct 2023, 23:05, edited 2 times in total.
Last edited by BottomJee on 02 Oct 2023, 23:05, edited 2 times in total.
e-Gmat;Moved to new forum
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Strengthen: PrintBest Limited is a renowned name in the printer B industry, known for its quality of printers and customer loyalty. Most
Weaken: Since the long-run cost of using a printer is determined primarily by the cost of cartridges, the purchasing decision of buyers is heavily influenced by the factor: whether the printer supports low-cost generic cartridges available in the market.
Strengthen: PrintBest Limited is a renowned name in the printer B industry, known for its quality of printers and customer loyalty. Most
Weaken: Since the long-run cost of using a printer is determined primarily by the cost of cartridges, the purchasing decision of buyers is heavily influenced by the factor: whether the printer supports low-cost generic cartridges available in the market.
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Source: e-GMAT
A printer manufacturer makes most of his profits by selling cartridges rather than selling printers. PrintBest Limited, which cannot sell its cartridges as cheaply as other manufacturers can, plans to alter the design of its printers so that they will accept only PrintBest cartridges. The company argues that this step will lead to increase in sales of its cartridges.In the table, select the statement that would, if true, most strengthen the manufacturers' conclusion and most weaken it, respectively. Make only two selections, one in each column.
|
Most Strengthen |
Most Weaken |
Statements |
| QualityPrint Ltd, a rival company of PrintBest that sells cartridges at an extremely attractive price, had also taken a similar step and it led to an increase in its sales. | ||
| PrintBest Limited is a renowned name in the printer B industry, known for its quality of printers and customer loyalty. | ||
| Printer industry is going through a downturn and some of the smaller printer manufacturers may go bankrupt. | ||
| In the past, several companies have tried to take similar steps but their sales have not increased remarkably. | ||
| Since the long-run cost of using a printer is determined primarily by the cost of cartridges, the purchasing decision of buyers is heavily influenced by the factor: whether the printer supports low-cost generic cartridges available in the market. | ||
| PrintBest will have to invest significantly in Research and development to develop these new printers. |
ShowHide Answer
Official Answer
Most
Strengthen: PrintBest Limited is a renowned name in the printer B industry, known for its quality of printers and customer loyalty. Most
Weaken: Since the long-run cost of using a printer is determined primarily by the cost of cartridges, the purchasing decision of buyers is heavily influenced by the factor: whether the printer supports low-cost generic cartridges available in the market.
Strengthen: PrintBest Limited is a renowned name in the printer B industry, known for its quality of printers and customer loyalty. Most
Weaken: Since the long-run cost of using a printer is determined primarily by the cost of cartridges, the purchasing decision of buyers is heavily influenced by the factor: whether the printer supports low-cost generic cartridges available in the market.
05 Mar 2022, 14:22
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My answer:
Most Strengthen: PrintBest Limited is a renowned name in the printer B industry, known for its quality of printers and customer loyalty.
Most weaken: Since the long-run cost of using a printer is determined primarily by the cost of cartridges, the purchasing decision of buyers is heavily influenced by the factor: whether the printer supports low-cost generic cartridges available in the market.
Statement Analysis:
Before reading the options, my pre-think is that "if customers thus abandon PrintBest's printers, all bets are off. "
(1) QualityPrint Ltd, a rival company of PrintBest that sells cartridges at an extremely attractive price, had also taken a similar step and it led to an increase in its sales.
This statements supports to a certain degree. But QualityPrint sells cartridges at an extremely attractive price. But we know that PrintBest "cannot sell its cartridges as cheaply as other manufacturers can". So the success in QualityPrint is unlikely to replicate in PrintBest.
(2) PrintBest Limited is a renowned name in the printer B industry, known for its quality of printers and customer loyalty.
This statement eliminates the major concern about the plan. If customers remain loyal, they are locked to PrintBest's printers (as well as cartridges).
Certainly, customers, upon hearing the plan, may revolt and renounce this brand. Still, this statement most strengthen the management's optimistic conclusion.
(3) Printer industry is going through a downturn and some of the smaller printer manufacturers may go bankrupt.
Mostly irrelevant / neutral. We do not know PrintBest's pecking order in printer industry.
(4) In the past, several companies have tried to take similar steps but their sales have not increased remarkably.
Mostly neutral or slightly weakening / strengthening. It seems that "several companies" still see sales increase, albeit at unremarkable rate. Whether it is slightly weakening or strengthening depends on our interpretation of "increase in sales of its cartridges" that PrintBest argues for.
(5) Since the long-run cost of using a printer is determined primarily by the cost of cartridges, the purchasing decision of buyers is heavily influenced by the factor: whether the printer supports low-cost generic cartridges available in the market.
Definitely weakening the conclusion. If customers shun PrintBest's printers, subsequent sales of cartridge evaporate.
(6) PrintBest will have to invest significantly in Research and development to develop these new printers.
Mildly negative depending on the extent of R&D investment. If new printers / cartridges are successful, investment is justified.
(7) To market this new line of printers, PrintBest will have to launch a marketing campaign that is more extensive than launched by any of its rivals so far.
Similar to (6), marketing campaign cost can be justified.
Most Strengthen: PrintBest Limited is a renowned name in the printer B industry, known for its quality of printers and customer loyalty.
Most weaken: Since the long-run cost of using a printer is determined primarily by the cost of cartridges, the purchasing decision of buyers is heavily influenced by the factor: whether the printer supports low-cost generic cartridges available in the market.
Statement Analysis:
Before reading the options, my pre-think is that "if customers thus abandon PrintBest's printers, all bets are off. "
(1) QualityPrint Ltd, a rival company of PrintBest that sells cartridges at an extremely attractive price, had also taken a similar step and it led to an increase in its sales.
This statements supports to a certain degree. But QualityPrint sells cartridges at an extremely attractive price. But we know that PrintBest "cannot sell its cartridges as cheaply as other manufacturers can". So the success in QualityPrint is unlikely to replicate in PrintBest.
(2) PrintBest Limited is a renowned name in the printer B industry, known for its quality of printers and customer loyalty.
This statement eliminates the major concern about the plan. If customers remain loyal, they are locked to PrintBest's printers (as well as cartridges).
Certainly, customers, upon hearing the plan, may revolt and renounce this brand. Still, this statement most strengthen the management's optimistic conclusion.
(3) Printer industry is going through a downturn and some of the smaller printer manufacturers may go bankrupt.
Mostly irrelevant / neutral. We do not know PrintBest's pecking order in printer industry.
(4) In the past, several companies have tried to take similar steps but their sales have not increased remarkably.
Mostly neutral or slightly weakening / strengthening. It seems that "several companies" still see sales increase, albeit at unremarkable rate. Whether it is slightly weakening or strengthening depends on our interpretation of "increase in sales of its cartridges" that PrintBest argues for.
(5) Since the long-run cost of using a printer is determined primarily by the cost of cartridges, the purchasing decision of buyers is heavily influenced by the factor: whether the printer supports low-cost generic cartridges available in the market.
Definitely weakening the conclusion. If customers shun PrintBest's printers, subsequent sales of cartridge evaporate.
(6) PrintBest will have to invest significantly in Research and development to develop these new printers.
Mildly negative depending on the extent of R&D investment. If new printers / cartridges are successful, investment is justified.
(7) To market this new line of printers, PrintBest will have to launch a marketing campaign that is more extensive than launched by any of its rivals so far.
Similar to (6), marketing campaign cost can be justified.
General Discussion
05 Mar 2022, 09:28
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Conclusion: In simple terms, the company is concluding that its plan will lead to an increase in sales of the company's cartridges.
1. QualityPrint Ltd, a rival company of PrintBest that sells cartridges at an extremely attractive price, had also taken a similar step and it led to an increase in its sales.
Strengthens the argument. When we are comparing 2 entities, it is always better to compare items with very small differences. In this statement, it is mentioned that QualityPrint Ltd is a rival company of PrintBest and QP achieved an increase in sales. Since both these companies are similar, it is highly likely that PrintBest is going to achieve an increase in sales.
2. PrintBest Limited is a renowned name in the printer B industry, known for its quality of printers and customer loyalty.
This statement neither strengthens nor weakens the conclusion. We are not quite sure if the customers are ready to accept this change or not.
3. Printer industry is going through a downturn and some of the smaller printer manufacturers may go bankrupt.
This statement neither strengthens nor weakens the conclusion. The scope of this statement is about smaller printer manufacturers. We don't know the category of PrintBest (small or large printer manufacturer).
4. In the past, several companies have tried to take similar steps but their sales have not increased remarkably.
This statement does not have any effect. Now, you can say that option 1 is similar to this option. Yes, I agree, but the problem is, the scope of this statement is several companies. Do these several companies include Printer companies? We don't know. In Option 1, the comparison is clear. Comparison is between printer companies.
5.Since the long-run cost of using a printer is determined primarily by the cost of cartridges, the purchasing decision of buyers is heavily influenced by the factor: whether the printer supports low-cost generic cartridges available in the market.
Weakens the argument It is mentioned that PrintBest Limited cannot sell its cartridges as cheaply as other manufacturers can. So, the cost of the cartridge is an important point. Now, the question is "whether the printer supports low-cost generic cartridges available in the market" is an important factor, then why should people buy PrintBest's printer or cartridge.
1. Expensive
2. No other cartridge can be used.
So, there is no reason for people to buy this printer and hence the sales won't increase.
6. PrintBest will have to invest significantly in Research and development to develop these new printers.
This statement neither strengthens nor weakens the conclusion. We still don't know if people are going to accept or reject the final product after R&D.
7. To market this new line of printers, PrintBest will have to launch a marketing campaign that is more extensive than launched by any of its rivals so far.
This statement neither strengthens nor weakens the conclusion. Even if the company launch a marketing campaign that is more extensive than launched by any of its rivals so far, we still don't know the reaction of people (if people are going to buy or not). So, we can't comment on the sales.
Answer
Option 1: Strengthens
Option 5: Weakens
1. QualityPrint Ltd, a rival company of PrintBest that sells cartridges at an extremely attractive price, had also taken a similar step and it led to an increase in its sales.
Strengthens the argument. When we are comparing 2 entities, it is always better to compare items with very small differences. In this statement, it is mentioned that QualityPrint Ltd is a rival company of PrintBest and QP achieved an increase in sales. Since both these companies are similar, it is highly likely that PrintBest is going to achieve an increase in sales.
2. PrintBest Limited is a renowned name in the printer B industry, known for its quality of printers and customer loyalty.
This statement neither strengthens nor weakens the conclusion. We are not quite sure if the customers are ready to accept this change or not.
3. Printer industry is going through a downturn and some of the smaller printer manufacturers may go bankrupt.
This statement neither strengthens nor weakens the conclusion. The scope of this statement is about smaller printer manufacturers. We don't know the category of PrintBest (small or large printer manufacturer).
4. In the past, several companies have tried to take similar steps but their sales have not increased remarkably.
This statement does not have any effect. Now, you can say that option 1 is similar to this option. Yes, I agree, but the problem is, the scope of this statement is several companies. Do these several companies include Printer companies? We don't know. In Option 1, the comparison is clear. Comparison is between printer companies.
5.Since the long-run cost of using a printer is determined primarily by the cost of cartridges, the purchasing decision of buyers is heavily influenced by the factor: whether the printer supports low-cost generic cartridges available in the market.
Weakens the argument It is mentioned that PrintBest Limited cannot sell its cartridges as cheaply as other manufacturers can. So, the cost of the cartridge is an important point. Now, the question is "whether the printer supports low-cost generic cartridges available in the market" is an important factor, then why should people buy PrintBest's printer or cartridge.
1. Expensive
2. No other cartridge can be used.
So, there is no reason for people to buy this printer and hence the sales won't increase.
6. PrintBest will have to invest significantly in Research and development to develop these new printers.
This statement neither strengthens nor weakens the conclusion. We still don't know if people are going to accept or reject the final product after R&D.
7. To market this new line of printers, PrintBest will have to launch a marketing campaign that is more extensive than launched by any of its rivals so far.
This statement neither strengthens nor weakens the conclusion. Even if the company launch a marketing campaign that is more extensive than launched by any of its rivals so far, we still don't know the reaction of people (if people are going to buy or not). So, we can't comment on the sales.
Answer
Option 1: Strengthens
Option 5: Weakens
