Check GMAT Club Decision Tracker for the Latest School Decision Releases https://gmatclub.com/AppTrack

 It is currently 25 May 2017, 21:56

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# Events & Promotions

###### Events & Promotions in June
Open Detailed Calendar

# computer work stations and low prices

Author Message
VP
Joined: 05 Jul 2008
Posts: 1409
Followers: 39

Kudos [?]: 388 [0], given: 1

computer work stations and low prices [#permalink]

### Show Tags

03 Feb 2009, 12:08
2
This post was
BOOKMARKED
A manufacturer of workstations for computer-aided design seeks to increase sales to its
most important corporate customers. Its strategy is to publish very low list prices for
workstations in order to generate interest among the buyers for those corporations.
Which of the following, if characteristic of the marketplace, would tend to cause the
manufacturer’s strategy to fail?
A. The proposed list prices would seem low to a typical buyer for the manufacturer’s
most important corporate customers.
B. The capabilities of workstations suitable for given jobs are not significantly
different among various manufacturers.
C. The manufacturer’s most important corporate customers employ as buyers
persons who are very knowledgeable about prices for workstations for customeraided
design.
D. Customers differ significantly in the percentage of resources they can devote to
computer workstations.
E. Buyers for corporations that purchase workstations for computer-aided design
receive bonuses for negotiating large discounts from the list price.
If you have any questions
New!
Director
Joined: 25 Oct 2006
Posts: 641
Followers: 14

Kudos [?]: 554 [0], given: 6

Re: computer work stations and low prices [#permalink]

### Show Tags

03 Feb 2009, 12:46
IMO E.

If further negotiations take place, Manufacturer may not compete with the prices. Whereas negotiation is inevitable for market behavior.
_________________

If You're Not Living On The Edge, You're Taking Up Too Much Space

Director
Joined: 01 Aug 2008
Posts: 738
Followers: 4

Kudos [?]: 694 [0], given: 99

Re: computer work stations and low prices [#permalink]

### Show Tags

03 Feb 2009, 13:32
only E comes close but not sure... remaining all 4 answers are way out of scope.
Manager
Joined: 10 Jan 2009
Posts: 104
Followers: 2

Kudos [?]: 39 [0], given: 2

Re: computer work stations and low prices [#permalink]

### Show Tags

03 Feb 2009, 13:50
In for E.
Easy after saving the Turtles.
VP
Joined: 05 Jul 2008
Posts: 1409
Followers: 39

Kudos [?]: 388 [0], given: 1

Re: computer work stations and low prices [#permalink]

### Show Tags

03 Feb 2009, 14:26
priyankur_saha@ml.com wrote:
IMO E.

If further negotiations take place, Manufacturer may not compete with the prices. Whereas negotiation is inevitable for market behavior.

K, I see what you are saying but some how was not convinced when I read this. But you made it obvious.

Thanks
Retired Moderator
Joined: 18 Jul 2008
Posts: 975
Followers: 10

Kudos [?]: 219 [3] , given: 5

Re: computer work stations and low prices [#permalink]

### Show Tags

03 Feb 2009, 16:40
3
KUDOS
E for me.

Why would buyers buy from a corporation that is selling at lower prices if they have an incentive on making big bonuses if the price of the workstations are higher? They'd rather go somewhere else.
VP
Joined: 05 Jul 2008
Posts: 1409
Followers: 39

Kudos [?]: 388 [0], given: 1

Re: computer work stations and low prices [#permalink]

### Show Tags

03 Feb 2009, 18:04
E for me.

Why would buyers buy from a corporation that is selling at lower prices if they have an incentive on making big bonuses if the price of the workstations are higher? They'd rather go somewhere else.

I guess this the better reason. Even if the list price is low, buyers who negotiate the deals will not get big bonuses as they cannot get the price much further down. The price is already low to start with. So their bonuses will become peanuts and probably will use quality related excuses to go some where else.

+1
Senior Manager
Joined: 02 Nov 2008
Posts: 279
Followers: 1

Kudos [?]: 103 [0], given: 2

Re: computer work stations and low prices [#permalink]

### Show Tags

03 Feb 2009, 18:39
E
Senior Manager
Joined: 26 May 2008
Posts: 431
Schools: Kellogg Class of 2012
Followers: 6

Kudos [?]: 73 [0], given: 4

Re: computer work stations and low prices [#permalink]

### Show Tags

03 Feb 2009, 19:44
Agree with E
Senior Manager
Joined: 23 May 2008
Posts: 416
Followers: 5

Kudos [?]: 397 [0], given: 14

Re: computer work stations and low prices [#permalink]

### Show Tags

03 Feb 2009, 22:00
definitely E
SVP
Joined: 17 Jun 2008
Posts: 1553
Followers: 11

Kudos [?]: 264 [0], given: 0

Re: computer work stations and low prices [#permalink]

### Show Tags

04 Feb 2009, 11:26
Here is my reason to pick C and reject E.

The strategy talks only of generating interest and not essentially converting interest into sale. In option C, if the employees are already knowledgeable about the price, the list price may not generate any further interest.

Am I reading too much here?
Retired Moderator
Joined: 18 Jul 2008
Posts: 975
Followers: 10

Kudos [?]: 219 [0], given: 5

Re: computer work stations and low prices [#permalink]

### Show Tags

04 Feb 2009, 12:01
If they see that the new price is lower than the "list price" and they are indeed knowledgeable, they would jump on it. Thus, the strategy would work...

scthakur wrote:
Here is my reason to pick C and reject E.

The strategy talks only of generating interest and not essentially converting interest into sale. In option C, if the employees are already knowledgeable about the price, the list price may not generate any further interest.

Am I reading too much here?
Senior Manager
Joined: 23 May 2008
Posts: 416
Followers: 5

Kudos [?]: 397 [0], given: 14

Re: computer work stations and low prices [#permalink]

### Show Tags

04 Feb 2009, 21:02
scthakur wrote:
Here is my reason to pick C and reject E.

The strategy talks only of generating interest and not essentially converting interest into sale. In option C, if the employees are already knowledgeable about the price, the list price may not generate any further interest.

Am I reading too much here?

yes i definitely think you are reading too much
SVP
Joined: 17 Jun 2008
Posts: 1553
Followers: 11

Kudos [?]: 264 [0], given: 0

Re: computer work stations and low prices [#permalink]

### Show Tags

04 Feb 2009, 22:07
If they see that the new price is lower than the "list price" and they are indeed knowledgeable, they would jump on it. Thus, the strategy would work...

Thanks for the clarification. It makes sense now.
VP
Joined: 18 May 2008
Posts: 1265
Followers: 17

Kudos [?]: 447 [0], given: 0

Re: computer work stations and low prices [#permalink]

### Show Tags

05 Feb 2009, 02:39
Definitely E.
If the buyers are getting bonus for negotiating the prices, they will rather go 2 a company where the listed price are high and they can negotiate. But if company's prices are already listed too low, they are left with no scope for further slash in prices and hence no bonus. Hence they will show no interest.This works aginst the company's strategy.
Intern
Joined: 28 Jan 2013
Posts: 13
Location: India
Concentration: Strategy, Finance
GMAT 1: 660 Q46 V35
GPA: 3.6
WE: Business Development (Energy and Utilities)
Followers: 0

Kudos [?]: 9 [0], given: 36

Re: computer work stations and low prices [#permalink]

### Show Tags

30 Oct 2013, 09:56
icandy wrote:
A manufacturer of workstations for computer-aided design seeks to increase sales to its
most important corporate customers. Its strategy is to publish very low list prices for
workstations in order to generate interest among the buyers for those corporations.
Which of the following, if characteristic of the marketplace, would tend to cause the
manufacture.

E it is. No Doubt in that.
Senior Manager
Joined: 15 Sep 2011
Posts: 362
Location: United States
WE: Corporate Finance (Manufacturing)
Followers: 7

Kudos [?]: 338 [2] , given: 45

Re: computer work stations and low prices [#permalink]

### Show Tags

08 Feb 2014, 15:16
2
KUDOS
Reasoning: So as to increase sales, manufacturers are cutting prices. Since this is a weaken question, the correct answer undoubtedly proves that sales will not increase after cutting costs or provides an alternative cause for increasing sales. An incorrect answer either strengthens the answer or is neutral.

A. The proposed list prices would seem low to a typical buyer for the manufacturer’s most important corporate customers. Strengthen - if the prices were low, its customers would likely purchase, thereby increasing sales.

B. The capabilities of workstations suitable for given jobs are not significantly different among various manufacturers. Stengthened - If the capabilities are not wide-ranging, then the low prices are likely to attract buyers, thereby increase sales.

C. The manufacturer’s most important corporate customers employ as buyers persons who are very knowledgeable about prices for workstations for customeraided
design. Strengthened - If m. employ those who are knowledgeable of prices, low prices are likely in attract more buyers, thereby increasing sales.

D. Customers differ significantly in the percentage of resources they can devote to computer workstations. [color=#ed1c24]Neutral - This neither weakens the argument or strengthens it.[/color]

E. Buyers for corporations that purchase workstations for computer-aided design receive bonuses for negotiating large discounts from the list price. Correct - This gives a different cause for the effect of increasing sales. The original cause and effect relationship is low prices and increased sales; whereas, now the such relationship is high discounts and increased sales. This indeed weakens the relationship.
Re: computer work stations and low prices   [#permalink] 08 Feb 2014, 15:16
Similar topics Replies Last post
Similar
Topics:
11 Eighty percent of notebook computers that were sold in 45 20 Aug 2016, 20:46
computer 4 08 Feb 2009, 10:15
low-priced newspapers and magazines 6 05 Sep 2008, 10:15
Nuclear Power Stations 12 06 Dec 2007, 19:40
Power Stations 2 02 Sep 2007, 09:51
Display posts from previous: Sort by