Cross-border collaboration is experiencing a modest

Question

Cross-border collaboration is experiencing a modest renaissance among smaller international oil cartels based in South America, even if business from a joint venture by several cartels is less brisk and profitable than by a monopoly. One upside of international cooperation is that a combined effort may allow these cartels to jointly win government subsidies in overseas markets where they would not have been able to operate.

Which of the following statements by a South American cartel accountant best fits the situation of South American cartels as described in the passage above?

A. “We would rather earn better percentage of a modest profit than zero percent of a potentially larger profit.”

B. “Our management believes that it is in the best interests of investors that we earn only a percentage of total profits and risk only a percentage of possible losses rather than assuming the entire risk of loss.”

C. “We should cooperate and build goodwill, rather than turn customers against us with unsupervised competition.”

D. “We would prefer to have Middle Eastern cartels work with us here in South America rather than having to participate in joint ventures in their home countries.”

E. “We would rather use our full resources to penetrate a territory than receive lesser profits in joint ventures.”

nusmavrik · Answer

Straight A - "jointly win government subsidies" is the key. Its better to collaborate than be a looser - "where they would not have been able to operate."

A. “We would rather earn better percentage of a modest profit than zero percent of a potentially larger profit.”

seekmba · Answer

can someone explain why D is incorrect here?

gautrang · Answer

D is incorrect because it is not mentioned in the premise where the join venture will be, whether it'll be in the home base or in the other's country. The premise only focus on the profitability of the Join venture.

A is the Correct answer.

angierch · Answer

Can someone explain why B is incorrect?

Thanks much!

goforgmat · Answer

" combined effort may allow these cartels to jointly win government subsidies in overseas markets where they would not have been able to operate."

the gist of the argument is make some profit by joint ventures than nothing at all.the above sentence clearly gives that clue.
Option A states that clearly.
whereas option B talks about investors and losses..according to the argument we have no information if they would incur losses.
If they cant operate there is no question of incurring losses in overseas market.
Hence in my opinion it is wrong.

sairam595 · Answer

Can someone explain why 'B' is wrong.

nmqan · Answer

Cross-border collaboration is experiencing a modest renaissance among smaller international oil cartels based in South America, even if business from a joint venture by several cartels is less brisk and profitable than by a monopoly. One upside of international cooperation is that a combined effort may allow these cartels to jointly win government subsidies in overseas markets  where they would not have been able to operate.

B. “Our management believes that it is in the best interests of investors that we earn only a percentage of total profits and risk only a percentage of possible losses rather than assuming the entire  risk of loss.”

They would not have been able to operate -> there would be no loss yet, overseas market is an opportunity for them. So B is out.

CyberStein · Answer

A. The sentence, "even if business from a joint venture by several cartels is less risk and profitable than by a monopoly", suggests that joint venture is less risk, less reward while monopolies are high risk, high reward; the situation of South American cartels is a shift from competition to joint/cooperative venture; a consistent modest profitability is preferred over a volatile profitability, which is best summary of the situation in SA. B is incorrect because it talks about the investors too much while the actual text makes no mention of them; plus, the parts about percentages is too wordy/akward, whereas with A it is phrased better. C is incorrect because it assumes too much on good will and unsupervised competition, when that is not the subject of the situation. D is wrong because the middle east is not mentioned, and it is irrelevant to profit/percentage. E is wrong because it talks about penetrating territory --- What territory? Irrelevant. The rest eliminated,  A is the best answer choice.

Turkish · Answer

even if business from a joint venture by several cartels is less brisk and profitable than by a monopoly.

I dont think it is brisk but rather risk

Only A answers it "We would rather earn better percentage of a modest profit than zero percent of a potentially larger profit.”

JuniqueLid · Answer

Shouldn't the logic of the stem be "we'd rather a smaller percentage (by forming JV) of a larger total (from the market that we would otherwise not be able to access on our own), than a larger percentage (monopoly) of a small pie (only home market)"?

Option (A)'s logic seems to have reversed this... although it still is best best of the bad options because it goes along the lines of "choosing something less over nothing".

Cross-border collaboration is experiencing a modest

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Cross-border collaboration is experiencing a modest

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