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Established companies often focus on defending the market they current

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Established companies often focus on defending the market they current  [#permalink]

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New post 02 Oct 2014, 20:04
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Difficulty:

  35% (medium)

Question Stats:

76% (01:57) correct 24% (02:06) wrong based on 279 sessions

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Established companies often focus on defending the market they currently dominate. As a result, they tend not to focus resources on potential new markets and tend to underestimate or ignore shifts in market dynamics. A clear case of this inward-looking strategy is

Which of the following best completes the passage?

a) a century-old paper manufacturer that adapts to the growing market for recycled papers by forming a committee to study ways in which it can effectively grow its business in this new market.

b) a diversified auto manufacturer that has historically led the market in sales of large trucks reacts to the recent increase in the market for fuel-efficient small cars by focusing on improving the fuel efficiency of its line of trucks in order to better compete with such smaller cars.

c)a diversified auto manufacturer that has historically led the market in sales of large trucks that consume significant amounts of fuel reacts to the recent increase in the market for fuel-efficient small cars by focusing on improving the look of its line of trucks.

d) a machine invented for use by auto manufacturers is now predominately used by airplane manufacturers as well as auto manufacturers.

e) a diversified auto manufacturer that has historically led the market in sales of large trucks reacts to the recent increase in the market for fuel-efficient small cars by minimizing production of large trucks and focusing on growing its business in the fuel-efficient small car market.

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Established companies often focus on defending the market they current  [#permalink]

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New post 04 Oct 2014, 23:14
Got this question in VeritasPrep Mock # 4. I marked Option B) in the mock. After analyzing the question, option B and option C are close.

Established companies often focus on defending the market they currently dominate. As a result, they tend not to focus resources on potential new markets and tend to underestimate or ignore shifts in market dynamics. A clear case of this inward-looking strategy is

Which of the following best completes the passage?

a) a century-old paper manufacturer that adapts to the growing market for recycled papers by forming a committee to study ways in which it can effectively grow its business in this new market. -> New market -> Incorrect

b) a diversified auto manufacturer that has historically led the market in sales of large trucks reacts to the recent increase in the market for fuel-efficient small cars by focusing on improving the fuel efficiency of its line of trucks in order to better compete with such smaller cars.
Trying to adapt to the new market dynamics of fuel efficiency. - Incorrect

c)a diversified auto manufacturer that has historically led the market in sales of large trucks that consume significant amounts of fuel reacts to the recent increase in the market for fuel-efficient small cars by focusing on improving the look of its line of trucks.
Correct as the company is not looking to adapt to changing market dynamics.

d) a machine invented for use by auto manufacturers is now predominately used by airplane manufacturers as well as auto manufacturers.
OFS as the company didn't do anything. The option says that the machine is used in different industry - Incorrect

e) a diversified auto manufacturer that has historically led the market in sales of large trucks reacts to the recent increase in the market for fuel-efficient small cars by minimizing production of large trucks and focusing on growing its business in the fuel-efficient small car market.
Company has changed the strategy to adapt to the new market dynamics - Incorrect
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Re: Established companies often focus on defending the market they current  [#permalink]

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New post 01 Nov 2014, 09:40
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Good example of a parallel reasoning question. Key thing to be kept in mind before reading the options is the structure of the argument. Many established companies ignore current market trend and focus on the market they dominate. Similar reasoning can be found in option C: An large truck manufacturer reacts to increase in market for small cars by trying to enhance its existing line of trucks.
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Re: Established companies often focus on defending the market they current  [#permalink]

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New post 09 Sep 2018, 01:17
aadikamagic wrote:
Established companies often focus on defending the market they currently dominate. As a result, they tend not to focus resources on potential new markets and tend to underestimate or ignore shifts in market dynamics. A clear case of this inward-looking strategy is

Which of the following best completes the passage?

a) a century-old paper manufacturer that adapts to the growing market for recycled papers by forming a committee to study ways in which it can effectively grow its business in this new market.

b) a diversified auto manufacturer that has historically led the market in sales of large trucks reacts to the recent increase in the market for fuel-efficient small cars by focusing on improving the fuel efficiency of its line of trucks in order to better compete with such smaller cars.

c)a diversified auto manufacturer that has historically led the market in sales of large trucks that consume significant amounts of fuel reacts to the recent increase in the market for fuel-efficient small cars by focusing on improving the look of its line of trucks.

d) a machine invented for use by auto manufacturers is now predominately used by airplane manufacturers as well as auto manufacturers.

e) a diversified auto manufacturer that has historically led the market in sales of large trucks reacts to the recent increase in the market for fuel-efficient small cars by minimizing production of large trucks and focusing on growing its business in the fuel-efficient small car market.


Main point to note is that the company is too focused to defend the market it dominates and hence, underestimate or ignore the shifts in market. This is best shown in option C, where the auto manufacturer reacts to increase in fuel-efficient cars by focusing on the looks of its line of trucks. The company should rather move towards bringing in more fuel-efficient cars rather than focusing on looks.
Hence C is the correct answer.

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Re: Established companies often focus on defending the market they current &nbs [#permalink] 09 Sep 2018, 01:17
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