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Business analysts remain divided over the reasons behind the declining

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Business analysts remain divided over the reasons behind the declining  [#permalink]

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New post Updated on: 15 Sep 2018, 10:46
2
Question 1
00:00
A
B
C
D
E

based on 85 sessions

75% (02:14) correct 25% (02:25) wrong

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Question 2
00:00
A
B
C
D
E

based on 84 sessions

38% (01:29) correct 62% (01:46) wrong

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Question 3
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C
D
E

based on 57 sessions

42% (01:47) correct 58% (02:03) wrong

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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.


According to the passage, a company built to produce a single piece of technology may

pivot to longer term uses of that technology as the company ages
be acquired by a larger company after the technology has been proven to work.
have a slightly longer lifespan than a business that was built for acquisition.
require less institutional knowledge in order to be successful than a traditional company would.
be victims of unstable marketplaces and be unable to survive as long as traditional companies might.


The author of this passage would most likely agree with which of the following?

It is important for business analysts to come to a consensus about the drivers of declining company lifespan
It is important to increase average company lifespan in order to increase marketplace stability and institutional knowledge.
The failure of older companies may lead to greater instability within once-stable industries.
In order for startups to survive once they become public, they should focus on long term growth rather than technological innovation.
Eliminating uncertainty within the marketplace will not decrease the problem of declining company lifespans.


According to the passage, a business analyst who believed that structural economic changes led to decreased company lifespans would also agree that
Shorter company lifespans might be a good thing, since it encourages greater innovation within the technology sector.
Lack of institutional knowledge following economic instability is the primary reason for declining company lifespans.
New businesses often fail due to changing consumer tastes or recessions rather than competition.
Many of the new companies that were created after older companies collapsed during recessions were left with an unstable marketplace.
Uncertainty in the marketplace invariably leads to decreased probability of company survival


Originally posted by aftergmat on 13 Sep 2018, 19:00.
Last edited by aftergmat on 15 Sep 2018, 10:46, edited 3 times in total.
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Re: Business analysts remain divided over the reasons behind the declining  [#permalink]

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New post 14 Sep 2018, 11:50
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Answer to question no. 2 seems incorrect. Experts please help
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Re: Business analysts remain divided over the reasons behind the declining  [#permalink]

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New post 14 Sep 2018, 12:03
Prateek176 wrote:
Answer to question no. 2 seems incorrect. Experts please help

Apologies for the wrong answer. I have updated the OA
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Re: Business analysts remain divided over the reasons behind the declining  [#permalink]

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New post 14 Sep 2018, 23:03
kindly explain how you got to the answers of both questions.
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Re: Business analysts remain divided over the reasons behind the declining  [#permalink]

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New post 15 Sep 2018, 10:43
1
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.
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Re: Business analysts remain divided over the reasons behind the declining  [#permalink]

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New post 16 Sep 2018, 08:21
The author of this passage would most likely agree with which of the following?
OA for 2
Whenever a passage asks you for something that the author would “most likely agree with”, it’s generally going to be asking you a universal question. With this in mind, the answer is going to need to be within the same scope, tone, and main idea as the overall passage. And since the question itself is so broad, it helps to look at the answer choices themselves first since it’s difficult to anticipate every statement the author might agree with.

Choice (A) can be eliminated because while the author does state that different business analysts have different opinions on the reasons for phenomenon discussed, the author doesn’t say whether this debate is necessarily bad. Choice (B) can be eliminated for similar reasons. While the entire passage is about declining company lifespans, it does not discuss whether we should work on increasing company lifespans in order to affect some sort of change in the marketplace.

Choice (C) is correct. The first passage discusses the fact that some business analysts believe that the failure of older companies leads to a vacuum within the marketplace, which in turn leads to instability. The use of the word “may” is important here - since only some business analysts (and not necessarily the author) believe this, the word may makes the answer flexible enough to cover that ambiguity.

Choice (D) can be eliminated because while the author does state the tendency for start ups to focus on technological innovation, the author does not come to the conclusion that this sort of pivot is necessary for the continued survival of the company. Choice (E) can also be eliminated since there is no way of knowing whether eliminating uncertainty within the marketplace will have any effect - the author just doesn’t come to a strong enough conclusion to support this argument.
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Re: Business analysts remain divided over the reasons behind the declining  [#permalink]

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New post 16 Sep 2018, 10:56
In Q) 2

C & E are close going by the question statistics.

C - Incorrect because "removal of once stable forces" is NOT THE SAME as "Failure of older companies"

E - Is what the 2nd paragraph is all about.

In Q) 3

D & E are close

E - Incorrect because of the following logic.

A leads to B & C does not imply B leads to C.option E says B leads to C.Incorrect.

D - Mentioned in the 2nd half of para 1

Cheerio lads!!!!
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Re: Business analysts remain divided over the reasons behind the declining &nbs [#permalink] 16 Sep 2018, 10:56
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