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# Companies that are employee-owned are commonly thought to be more prof

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Re: Companies that are employee-owned are commonly thought to be more prof [#permalink]
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Companies that are employee-owned are commonly thought to be more profitable than are publicly-owned companies or companies with a single owner. If employees have a financial stake in the company, it is in their interest to work harder. If profit goes primarily to stockholders or a small group of owners, employees have less incentive to work hard. Yet, in a comparison of airline companies, Wingspan Airlines, which is entirely employee-owned, has recorded losses for the previous three quarters, whereas Longflite Airlines, which is owned by billionaire Martin Pearson, has recorded record profits for the previous three quarters.

Which of the following, if true, best supports the conclusion that employee-owned companies are more profitable than are non-employee-owned companies?

A. Wingspan Airlines has recently initiated routes to New Zealand, Australia, and Tahiti. Irrelevant as this does not help support.

B. Longflite Airlines has been owned by Martin Pearson for only six months. Even though it has been only since last 6 months by Martin Pearson the company has been showing profits from last 3 quarters and we do not know by whom was it owned before that so lets not cross this.

C. A cosmetics company that is entirely employee-owned has, in the last year, increased its market share by 18 percent. Out of scope

D. Profits recorded by Longflite Airlines include profits earned by a subsidiary that manufactures airplane parts, and because of a nationwide drop in airplane travel, all airline companies have chosen to repair their older planes rather than spend dwindling revenues on new planes. This option gives us another reason for profits and talks about subsidiary. Supports the conclusion.

E. The employees of Wingspan Airlines voluntarily took pay cuts to give the company a chance to recover, and the employees of Longflite recently went on strike to protest poor working conditions. Does not support the conclusion

The question is asking us to support the conclusion that employee-owned companies are more profitable than are non-employee-owned companies. The stimulus has quoted an example in contrast stating that A X company which is employee owned company has reported losses whereas a Y company which is owner owned has shown profits. If we show that another factor is responsible for the profit in Y company would help us to support the conclusion. So now between B and D D states that all airline companies are not performing well be it owner based or employee owned; however company Y is making profit because of a subsidiary division. So D is better option.
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Companies that are employee-owned are commonly thought to be more prof [#permalink]
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Kunal112 wrote:
i chose B over D because we need to strengthen the conclusion
Conclusion : employee-owned companies are more profitable than are non-employee-owned companies
Option B - Though not very convincing because it does not state's that before Pearson, that company was an employee owned, but still it leaves a scope for the reader to think so
Option D - This one states the business of all airlines is down. This in no way strengthens the above conclusion

Dear Kunal112,

the argument says that employee ownder companies are more profitable than publicly owned or single owner companies. But an instance of single owner company performing bettr than employee ownder company is presented. So we have to find an option that can explain this gap.

Option B cannot be a necessary strengthener because it is irrelevant to the argument or in the worst case weakens the argument.

Weaken:
what if the billionaire took over and the profits for those 2 quarters are more than the 1st quarter when the company was still not with a single owner. Consider the below case

Q1 - profits of 450 million USD
*Billionaire took over and made some positive changes in the organisation*
Q2 - 650 million USD
Q3 - 800 million USD

This case completely weakens the stand of the argument

While searching for a strengthener or a weakener, always remember that the option should go only 1 way but not 2 ways - either strengthen or weaken
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Re: Companies that are employee-owned are commonly thought to be more prof [#permalink]
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Re: Companies that are employee-owned are commonly thought to be more prof [#permalink]
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