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Updated on: 24 Apr 2021, 03:18
Originally posted by aftergmat on 13 Sep 2018, 20:00.
Last edited by Sajjad1994 on 24 Apr 2021, 03:18, edited 7 times in total.
Last edited by Sajjad1994 on 24 Apr 2021, 03:18, edited 7 times in total.
Reformatted
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Question 1
B
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
5%
(low)
Question Stats:
90% (02:21) correct
10%
(02:30) wrong
based on 703
sessions
History
Date
Time
Result
Not Attempted Yet
Question 2
C
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
75%
(hard)
Question Stats:
41% (01:28) correct 59%
(01:32) wrong
based on 707
sessions
History
Date
Time
Result
Not Attempted Yet
Question 3
D
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
75%
(hard)
Question Stats:
49% (01:54) correct 51%
(01:46) wrong
based on 653
sessions
History
Date
Time
Result
Not Attempted Yet
Business analysts remain divided over the reasons behind the declining average lifespan of publicly traded companies. In 1960, companies had a 50% chance of lasting at least twenty years and an 80% chance of lasting at least ten years. In contrast, companies founded in 2000 had only a 50% chance of companies lasting at least 10 years. Some business analysts point to structural changes in the economy to explain this change. As larger, older businesses failed because of recessions or changing consumer tastes, the market was left open to an influx of smaller companies. However, these businesses were left with a host of problems, such as lack of institutional knowledge, which led to uncertainty and decreased the probability of company survival. Further, the removal of once-stable forces within the marketplace led to instability that made it more difficult for newer companies to survive for more than a few years past their initial public offerings.
A growing number of analysts, however, contend that modern companies are purposefully built to encourage shorter business lifespans. They explain this trend in the context of the growing belief that certain businesses should be “built for acquisition.” Such businesses, they maintain, are built to last only until the product the company produces proves to be a success. Once the product or technology is successful, larger companies acquire the technology and the start up dissolves. This theory is built on the belief that many modern start-ups tend to be centered around a single technology or suite of technologies rather than their long term uses.
A growing number of analysts, however, contend that modern companies are purposefully built to encourage shorter business lifespans. They explain this trend in the context of the growing belief that certain businesses should be “built for acquisition.” Such businesses, they maintain, are built to last only until the product the company produces proves to be a success. Once the product or technology is successful, larger companies acquire the technology and the start up dissolves. This theory is built on the belief that many modern start-ups tend to be centered around a single technology or suite of technologies rather than their long term uses.
1. According to the passage, a company built to produce a single piece of technology may
A. pivot to longer term uses of that technology as the company ages
B. be acquired by a larger company after the technology has been proven to work.
C. have a slightly longer lifespan than a business that was built for acquisition.
D. require less institutional knowledge in order to be successful than a traditional company would.
E. be victims of unstable marketplaces and be unable to survive as long as traditional companies might.
A. pivot to longer term uses of that technology as the company ages
B. be acquired by a larger company after the technology has been proven to work.
C. have a slightly longer lifespan than a business that was built for acquisition.
D. require less institutional knowledge in order to be successful than a traditional company would.
E. be victims of unstable marketplaces and be unable to survive as long as traditional companies might.
2. The author of this passage would most likely agree with which of the following?
A. It is important for business analysts to come to a consensus about the drivers of declining company lifespan
B. It is important to increase average company lifespan in order to increase marketplace stability and institutional knowledge.
C. The failure of older companies may lead to greater instability within once-stable industries.
D. In order for startups to survive once they become public, they should focus on long term growth rather than technological innovation.
E. Eliminating uncertainty within the marketplace will not decrease the problem of declining company lifespans.
A. It is important for business analysts to come to a consensus about the drivers of declining company lifespan
B. It is important to increase average company lifespan in order to increase marketplace stability and institutional knowledge.
C. The failure of older companies may lead to greater instability within once-stable industries.
D. In order for startups to survive once they become public, they should focus on long term growth rather than technological innovation.
E. Eliminating uncertainty within the marketplace will not decrease the problem of declining company lifespans.
3. According to the passage, a business analyst who believed that structural economic changes led to decreased company lifespans would also agree that
A. Shorter company lifespans might be a good thing, since it encourages greater innovation within the technology sector.
B. Lack of institutional knowledge following economic instability is the primary reason for declining company lifespans.
C. New businesses often fail due to changing consumer tastes or recessions rather than competition.
D. Many of the new companies that were created after older companies collapsed during recessions were left with an unstable marketplace.
E. Uncertainty in the marketplace invariably leads to decreased probability of company survival
A. Shorter company lifespans might be a good thing, since it encourages greater innovation within the technology sector.
B. Lack of institutional knowledge following economic instability is the primary reason for declining company lifespans.
C. New businesses often fail due to changing consumer tastes or recessions rather than competition.
D. Many of the new companies that were created after older companies collapsed during recessions were left with an unstable marketplace.
E. Uncertainty in the marketplace invariably leads to decreased probability of company survival
15 Sep 2018, 11:43
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QA for Question 3
Whenever the test asks you to determine what the author (or a source cited within the passage) would “likely believe” it’s asking you to make a conclusion about which answer choice falls within the argument in question - often that means you are being asked to make an inference. In this case, you are asked to find a piece of information that would agree with the beliefs of a business analyst who also believed that structural economic changes lead to decreased company lifespans. The first question is therefore where that business analyst is discussed. From your STOP reading of this passage, you should recognize that this sort of person is discussed in the first paragraph.
You are told that these analysts believe that older businesses failed due to recessions or changing tastes. New companies came in, but they were left with an unstable marketplace and decreased institutional knowledge.
Choice (A) can be easily eliminated since it makes a value judgment about whether companies should have shorter lifespans, something that neither the business analysts nor the author does. Choices (B) and (E) can be eliminated on the basis of word choice. Both the words “primary” and “invariably” require some discussion of frequency. Since neither lack of institutional knowledge nor uncertainty in the marketplace can be cited as something that was true for every company, neither answer can be correct. Finally, choice (C) can be eliminated because it incorrectly ascribes the problems of changing consumer tastes and recessions to new companies rather than to old companies.
That leave you with choice (D), that many new companies that were created after the collapse of earlier companies were left with an unstable marketplace. It is clear from the first paragraph that at least some of the new companies were coming into an unstable marketplace. But is this enough to use the word “many”? Take a look at the wording of the paragraph. The market was left with an “influx” of smaller companies. These companies (the influx) were left with an unstable marketplace. Since the word influx implies many companies, the word many in choice (D) is acceptable and choice (D) is correct.
Whenever the test asks you to determine what the author (or a source cited within the passage) would “likely believe” it’s asking you to make a conclusion about which answer choice falls within the argument in question - often that means you are being asked to make an inference. In this case, you are asked to find a piece of information that would agree with the beliefs of a business analyst who also believed that structural economic changes lead to decreased company lifespans. The first question is therefore where that business analyst is discussed. From your STOP reading of this passage, you should recognize that this sort of person is discussed in the first paragraph.
You are told that these analysts believe that older businesses failed due to recessions or changing tastes. New companies came in, but they were left with an unstable marketplace and decreased institutional knowledge.
Choice (A) can be easily eliminated since it makes a value judgment about whether companies should have shorter lifespans, something that neither the business analysts nor the author does. Choices (B) and (E) can be eliminated on the basis of word choice. Both the words “primary” and “invariably” require some discussion of frequency. Since neither lack of institutional knowledge nor uncertainty in the marketplace can be cited as something that was true for every company, neither answer can be correct. Finally, choice (C) can be eliminated because it incorrectly ascribes the problems of changing consumer tastes and recessions to new companies rather than to old companies.
That leave you with choice (D), that many new companies that were created after the collapse of earlier companies were left with an unstable marketplace. It is clear from the first paragraph that at least some of the new companies were coming into an unstable marketplace. But is this enough to use the word “many”? Take a look at the wording of the paragraph. The market was left with an “influx” of smaller companies. These companies (the influx) were left with an unstable marketplace. Since the word influx implies many companies, the word many in choice (D) is acceptable and choice (D) is correct.
General Discussion
Prateek176
Joined: 12 Mar 2017
Last visit: 10 Jun 2021
Posts: 172
Given Kudos: 87
Location: India
Concentration: Strategy, General Management
Schools: ISB '21 (D) IIMC MBAEx "21 (WL)
GMAT 1: 700 Q49 V37
GPA: 4
14 Sep 2018, 12:50
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Answer to question no. 2 seems incorrect. Experts please help
