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24 Mar 2022, 01:30
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82% (01:57) correct
18%
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wrong
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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.
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.
24 Mar 2022, 04:55
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Grammatically, none of the answers can "complete the passage" (in the sense that you don't get an English sentence if we're filling in a blank at the end of the stem). That aside, the stem tells us that companies dominant in one area tend to focus on that area. When there is an important market shift, these companies do two things: they underestimate it, and they ignore it. Answer B might be tempting here because the truck manufacturer continues to focus on trucks. But in B, the truck company is not ignoring the market shift; it is responding to it by improving fuel efficiency. The best answer here is C; in C we also have a truck company that continues to focus on trucks despite an increased market for fuel-efficient vehicles. Not only that, but the company ignores the market shift towards fuel efficiency (and, assuming that shift is significant, underestimates it) by focusing on the appearance of their trucks rather than their gas mileage. So C is the "clear case" that the question asks for.
The other answers aren't close; answers A and E describe companies that do respond to a market shift by trying to enter the new market, while D has nothing to do with the question.
The other answers aren't close; answers A and E describe companies that do respond to a market shift by trying to enter the new market, while D has nothing to do with the question.
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