Established manufacturers face a tension between exploiting their

Question

Established manufacturers face a tension between exploiting their existing capabilities, in service of short-term profits, exploring new opportunities with an eye to long-term viability. Exploitation goals include constructive dialogue with existing clients, together with the at-scale improvement of products and manufacturing techniques that the dialogue informs. Exploration includes experimental refinement—or creation from scratch—of product prototypes and manufacturing processes, as well as preparatory analysis of and outreach into potential new markets.

Exploration and exploitation ultimately must compete for a firm’s managerial and capital resources. Maldonado showed that firms allocating too many resources to exploitation—while nearly always exceptionally productive and cost-efficient in the immediate term—face high probabilities of insolvency as markets evolve. Conversely, De La Cruz showed that excess allocation in the opposite direction causes firms to accumulate more provisional technologies than they can possibly commercialize, and therefore to spread research and development resources far too thinly across those technologies, while also struggling to meet absolute minimum production figures. Executives must guide their companies to the optimal balance in between.

Some manufacturers have chartered functionally separate, largely autonomous company divisions known as “skunkworks” to address exploration goals. These operate at a remove from short-term market fluctuations and their unpredictable-yet-always-urgent pressures on main production floors, so that their small teams can maintain the sharp collective focus that skunkworks were conceived to promote. Critics, however, claim that innovations from a sequestered unit cannot produce returns until they and their underlying knowledge base are integrated into the company’s mainstream operations—and that only then will both sides of the attempted knowledge transfer discover just how many significant communication, skill and culture gaps have opened up across the scrupulously maintained distance between the skunkworks and the main floor, rendering the integration process anywhere from tedious and exasperating at best, to actually impossible at worst,

In a second, newer approach to this overall question of balance—known as employee ambidexterity—individual employees choose independently how to allocate their time between exploitative and exploratory tasks. Proponents contend that this model fosters a culture of continuous innovation while preserving the unity and camaraderie of the corporation as a whole. Skeptics counter that without institutional buffers, short-term performance pressures will consistently crowd out exploratory activity, leaving the company’s long-term adaptive capacity to languish. 
   1 
 1. The primary purpose of the passage is to

(A) describe a challenge in strategic management and analyze two possible approaches to it

(B) explain and illustrate two types of corporate performance objectives that often come into conflict

(C) lay out and analyze two types of ways in which corporations differentiate themselves when competing for managers and capital

(D) present two solutions to a problem in corporate management and argue for one over the other

(E) trace the origins of a particular confilct of interest commonly faced by newly established corporations

2 
 2. Which of the following, if true of skunkworks, most undermines the argument that the passage attributes to their critics?

(A) When the products or innovations they develop cannot easily be incorporated into the corporation’s main lines of business, they can typically be sold off to other firms at considerable capital gains.

(B) Their products have much better prospects of integration into the corporation’s core business if their employees work three days per week in the skunkworks and two days per week in one of the corporation’s main departments than if they work in the skunkworks full-time.

(C)) Their products and innovations tend to have more in common with those developed by startup companies, which do not have shareholders and are not expected to be profitable overall, than with their own corporation’s main output.

(D) Their employees typically share a considerable depth of knowledge or experience in one or more specialized areas, enabling them to develop products for narrowly defined niche markets.

(E) Their employees are normally paid large bonuses if any of their products or innovations are eventually integrated into the corporation’s larger main lines of production.

3 
 3. Which of the following considerations, if true, most strongly argues FOR the implementation of  exactly one  of skunkworks or employee ambidexterity and AGAINST the implementation of the other?

(A) An exploration project is eight times more likely to produce profitable innovations if everyone working on that project has at least one year’s work experience at exploiting the company’s current capabilities.

(B) An exploration project is likely to produce eventual value only if the employees assigned to the project consistently work together in close collaboration.

(C) Employees who are assigned to exploration projects stay with their current employer for an average of nine years longer than employees whose work functions solely to exploit existing capabilities.

(D) Employees who work full-time on exploitation often grow to resent what they perceive as the greater freedom or special status of other employees working on exploration projects in the same facility.

(E) Exploration projects are almost three times as likely to succeed when the workers have a hand in setting their work schedule than when they do not.

4 
 4. According to the passage, manufacturing corporations that allocate less than the optimal proportion of resources to exploration are likely to

(A) find themselves in a highly favorable short-term financial position

(B) generate little profit overall as e result of insufficient aggregate technological capability

(C) have recently reduced total expenditure on their existing lines of production

(D) overspend on research and development for products that currently generate a profit

(E) weather large-scale changes in their respective markets better than firms that have committed a greater share of resources to existing exploration projects

ankushsambare · Answer

Paragraph-wise summary:
 Paragraph 1: 
Firms must balance improving existing products (exploitation) for short-term gains with developing new products and markets (exploration) for long-term success.
 Paragraph 2: 
Both strategies compete for limited resources. Overdoing exploitation risks long-term failure, while too much exploration weakens current performance. A balance is needed.
 Paragraph 3: 
“Skunkworks” teams separate innovation work from main operations, enabling focus, but may fail when reintegrated due to communication and cultural gaps.
 Paragraph 4: 
Employee ambidexterity lets individuals split time between routine and innovative tasks. It may encourage innovation, but daily pressures could suppress it.
Tone
Analytical, academic, and balanced, presenting multiple viewpoints on organizational strategy without taking a strong side.

1. The primary purpose of the passage is to  
The passage describes the  exploitation vs exploration trade-off  in firms and analyzes  two approaches  to manage it (skunkworks and employee ambidexterity).
Elimination:
 Answer: A 
B – too narrow (just objectives)
C – irrelevant focus (competition for managers/capital)
D – no preference argued
E – no origin discussed

2. Which of the following, if true of skunkworks, most undermines the argument that the passage attributes to their critics?  
Critics say skunkworks are flawed because their innovations fail to integrate into the main company due to communication, skill, and culture gaps.
We need to weaken this.
A: Even if integration fails, innovations can still be sold for profit → reduces importance of integration problem → weakens critics
 Correct 
B: Shows better integration requires closer connection → supports critics
C: Shows mismatch with core business → supports critics
D: Talks about expertise, not integration issue → irrelevant
E: Bonus incentives do not address integration problem → irrelevant

3. Which of the following considerations, if true, most strongly argues FOR the implementation of  exactly one  of skunkworks or employee ambidexterity and AGAINST the implementation of the other?  
We want a statement that supports one approach (skunkworks or employee ambidexterity) and argues against the other.
Key difference:
Skunkworks: separate teams, fixed structure
Employee ambidexterity: individuals split time with flexibility
Option analysis:
A: Prior exploitation experience helps exploration → does not favor either approach
B: Requires close collaboration → fits both approaches
C: Longer retention in exploration roles → irrelevant
D: Mentions resentment but does not clearly favor one model
E: Success improves when workers set their own schedule → supports employee ambidexterity and weakens skunkworks
 Final Answer: E

4. According to the passage, manufacturing corporations that allocate less than the optimal proportion of resources to exploration are likely to  
The passage says too little exploration leads to too many uncommercialized technologies and weak long-term adaptability. It harms a firm’s ability to develop and use new technologies effectively.
Option analysis:
A: Only mentions short-term benefit, not main idea → eliminate
B: Lack of exploration reduces technological capability and overall success → matches passage 
 Correct 
C: Talks about existing production costs, not exploration issue → eliminate
D: Talks about overspending, opposite problem → eliminate
E: Says they handle market changes better, contradicts passage → eliminate

BongBideshini · Answer

Q4. Ans A 
If a company allocates less to exploration, it means it is allocating more to the other end of the spectrum:  exploitation . So, we need to look at what the passage says about firms that over-allocate resources to exploitation.

Look at Paragraph 2, where the author discusses Maldonado’s research:
 
Option (A) mirrors this perfectly, using the phrase  "highly favorable short-term financial position."

RonPurewal · Answer

OFFICIAL EXPLANATION

1.  The primary purpose of the passage is to

(A) describe a challenge in strategic management and analyze two possible approaches to it
 
(B) explain and illustrate two types of corporate performance objectives that often come into conflict

(C) lay out and analyze two types of ways in which corporations differentiate themselves when competing for managers and capital

(D) present two solutions to a problem in corporate management and argue for one over the other

(E) trace the origins of a particular confilct of interest often faced by newly established corporations

For a passage as neatly divided into small paragraph units as this one, a paragraph-by-paragraph summary can be helpful in drilling down to the author’s primary purpose. Since the answer to Primary Purpose questions always starts with a verb, let’s start each of the paragraph summaries with a verb.

¶1: Describes two opposing goals toward which manufacturing companies must decide how to allocate capital and managerial resources.

¶2: Shows that allocating ALL resources to just one of the two goals results in negative outcomes.

¶3: Describes “skunkworks”, a type of subsidiary that some companies have created in order to better pursue both of the general goals discussed. Presents pros and cons of “skunkworks”.

¶4: Describes “employee ambidexterity”, a scheduling/logistics framework that some companies use in order to better pursue both of the general goals discussed. Presents pros and cons of this framework.

Now, compress this outline to the approximate length of the answer choices to this question:
  Describes the problem/challenge faced by businesses of pursuing two largely opposing goals simultaneously. Presents two specific strategies for better pursuing both goals at once, discussing pros and cons of each.  
Of the choices given, (A) is the only one that precisely matches this brief summary of the essentials.

INCORRECT ANSWERS:

(B) Exploration and exploitation are far too nebulous, general, and abstract to be feasibly described as “performance objectives” in any realistic context. Furthermore, while exploration and exploitation are defined in a general sense, neither of them is  illustrated  (with specific examples) in this passage.

(C) The author makes the implied point that all viable businesses must pursue both exploration and exploitation, so simply pursuing one or both of these will not meaningfully differentiate any viable firm from any other. Moreover, exploration and exploitation are general, categorical abstractions—essentially the polar opposite of the  specific strategies  that could feasibly be described as “ways in which corporations differentiate themselves”. Finally, the passage does not mention competition  among firms  to hire managers or acquire capital; only the internal conflict faced by each company trying to decide how to allocate these personnel and resources between exploration and exploitation is discussed.

(D) Skunkworks and employee-ambidexterity frameworks could each be  one component of a solution  to the complex problem of how to balance the allocation of corporate resources between exploration and exploitation goals, but neither of them could reasonably BE that solution all by itself. More fundamentally, the passage never attempts to make any sort of comparison or relative judgment at all between skunkworks and employee-ambidexterity frameworks—let alone actually “argue for one over the other”

(E) The passage’s opening sentence describes the fundamental tension between exploration and exploitation as a problem mainly facing “established manufacturers”. “Established” and “  newly   established” are fundamentally contrasting descriptions, so “newly established corporations” are not the subset of businesses under examination here. (Furthermore, this choice only has “corporations”—also failing to capture the passage’s much more specific focus on   manufacturing   corporations.) The passage also does not give any sort of historical timeline of the tension between manufacturers’ pursuit of exploration and their exploitation of current lines of production; in other words, nowhere does this passage “trace the origins” of that tension.

The correct answer is (A).

2.    Which of the following, if true of skunkworks, most undermines the argument that the passage attributes to their critics? 
 
  (A) When the products or innovations they develop cannot easily be incorporated into the corporation’s main lines of business, they can typically be sold off to other firms at considerable capital gains.
   
(B) Their products have much better prospects of integration into the corporation’s core business if their employees work three days per week in the skunkworks and two days per week in one of the corporation’s main departments than if they work in the skunkworks full-time.

(C)) Their products and innovations tend to have more in common with those developed by startup companies, which do not have shareholders and are not expected to be profitable overall, than with their own corporation’s main output.

(D) Their employees typically share a considerable depth of knowledge or experience in one or more specialized areas, enabling them to develop products for narrowly defined niche markets.

(E) Their employees are normally paid large bonuses if any of their products or innovations are eventually integrated into the corporation’s larger main lines of production.

The first step here, of course, is to find “the argument attributed to their   critics”. That argument is easy to find; it’s at the end of the paragraph about skunkworks.

What do the critics say? 
They say that /1/ “innovations from a sequestered unit cannot produce returns until they and their underlying knowledge base are integrated into the company’s mainstream operations”; /2/ “only then will both sides of the attempted knowledge transfer discover just how many significant communication, skill and culture gaps have opened up across the scrupulously maintained distance between the skunkworks and the main floor”; /3/ “rendering the integration process anywhere from tedious and exasperating at best, to actually impossible at worste”.

Of these three sets of thoughts, only /1/ contains a statement that’s actually well-defined enough to be a good-faith basis for a GMAT strengthening/weakening problem. (/2/ makes a rhetorically powerful statement but contains zero specifics of any kind; /3/ is mostly speculative, and covers such a wide range of possibilities that there’s no real way to counterargue it.)

That statement is:  An innovation made in an isolated unit within a larger company can eventually become profitable for the company    ONLY    if that innovation is introduced into the company’s wider, mainstream operations.  That “only” requires that there be  no other conceivable  way for innovations grown in a skunkworks to ever return value to the corporation. Accordingly, /1/ can be undercut by the existence of ANY other route to profitability for a skunkworks-developed innovation, other than introduction into the same corporation’s main operations. 
Nothing further is asserted in /1/, so we have a concrete goal:  Any OTHER way for a skunkworks-grown innovation to pay an eventual return back to the larger company  will be the correct answer.

That’s choice A, which says that the company can also profit by selling these innovations off to other manufacturers.

INCORRECT ANSWERS:

(B) The logical integrity of “if X, then Y” (= “X only if Y”), or of the corresponding cause/effect relationship, is not affected by variations in the numerical probability of “X” or “Y”; only the causal logic is relevant. This choice describes a statistical factor that affects those individual probabalities but does not bear on the cause/effect logic, so it is irrelevant.

(C) Ways in which a skunkworks embedded within a larger corporation may or may not incidentally resemble some altogether different corporate structure (like a startup) have no relevance to the critics’ argument, which is not concerned with any entity outside the parent corporation of the skunkworks.
Moreover, the statement in this choice provides a solid, compact reason why part /1/ of the critics’ argument could be TRUE: If a skunkworks functions essentially like a business model that is not intended to generate profits, then it stands to reason that its prroducts probably won’t generate any profits without the help of other parts of the parent corporation that ARE highly concerned with generating profits. In other words, this choice gives a highly plausible reason WHY innovations from a skunkworks DO need to reach the parent company’s mainstream production lines to become profitable. Obviously, a statement that is perfectly consistent with everything in an argument  and  that provides additional plausibility FOR the argument’s line of reasoning cannot possibly  WEAKEN  that argument.

(D) This choice provides some additional specific reasons TO create skunkworks divisions within larger corporations, over and above the single specific reason given in the passage (= that a skunkworks doesn’t need to be perpetually reacting to the rapid short-term changes in market demand, in the way that the parent company’s mainsteam manufacturing divisions do). The critics’ argument is not about whether skunkworks should or shouldn’t exist in the first place, so the content of choice D is irrelevant to this problem.
Moreover, this choice has nothing to do with the potential  profitability  of innovations from a skunkworks, which IS the idea at the heart of the critics’ argument—an observation that once again shows this choice to be irrelevant. (Each of the two approaches here  by itself  is sufficient to prove that this choice is irrelevant.)

(E) The logical integrity of “if X, then Y” (= “X only if Y”), or of the corresponding cause/effect relationship, is not affected by variations in the numerical probability of “X” or “Y”; only the causal logic is relevant. This choice—like choice B—describes an additional factor that could plausibly affect those individual probabalities but does not bear on the cause/effect logic, so it is irrelevant for the same reasons.

The correct answer is (A).

3.    Which of the following considerations, if true, would strengthen an argument for implementing exactly one of skunkworks or employee ambidexterity, and would weaken an argument for implementing the other?

(A) An exploration project is eight times more likely to produce profitable innovations if everyone working on that project has at least one year’s work experience at exploiting the company’s current capabilities.

(B) An exploration project is likely to produce eventual value only if the employees assigned to the project consistently work together in close collaboration. 
 
(C) Employees who are assigned to exploration projects stay with their current employer for an average of nine years longer than employees whose work functions solely to exploit existing capabilities.

(D) Employees who work full-time on exploitation often grow to resent what they perceive as the greater freedom or special status of other employees working on exploration projects in the same facility.

(E) Exploration projects are almost three times as likely to succeed when the workers have a hand in setting their work schedule than when they do not.

This problem—like most GMAT problems with an unusually large number of words in the question prompt itself—requires little beyond reading and following the directions carefully and literally.

In this case, we want a choice that  ALIGNS WITH the basic structure and/or purpose of EITHER skunkworks OR employee ambidexterity, but CONFLICTS with the structure and/or purpose of the other paradigm.

Let’s review these basic features and goals:

WHAT IS a skunkworks? and WHY?:
• Separate, autonomous subdivision of larger co.
• Focused on exploration
• Small team works together on specialized projects

WHAT IS employee ambidexterity? and WHY?:
• Each employee individually decides when to work on exploration vs. exploitation tasks
• Promotes positive cohesion / camaraderie

For brevity, the following key will address both of these sets of points together for each answer choice.  When you are solving this problem , on the other hand, you should  strictly use the criteria for ONE paradigm at a time , for the simple reason that it’s more efficient—you eliminate as many choices as you can using just half the information, before trying to do any juggling of both halves.

Here is how each answer choice stacks up against the above sets of criteria.

(A): Employees’ aggregate work experience on exploitation tasks has no bearing on any of the considerations above, either for or against either paradigm, so this choice is irrelevant overall and can be eliminated.

(B): One of the fundamental features of the skunkworks paradigm is that the employees on a skunkworks project “maintain a sharp collective focus”—in other words, that they work in ongoing close collaboration as a team—so this choice argues concretely in favor of the skunkworks paradigm. By contrast, the complete freedom of scheduling given separately to each employee under employee ambidexterity is fundamentally incompatible with ongoing close teamwork (which cannot happen unless the team members all work on roughly identical schedules), so this choice forms a blisteringly strong attack on the employee-ambidexterity paradigm—effectively guaranteeing that nothing of any eventual value to the company will ever be produced under that paradigm.
This choice therefore argues, simultaneously,  for  skunkworks and  against  employee ambidexterity, so it’s the correct answer.

(C): The length of time that employees spend  overall  with one employer before leaving or retiring—a longer-term outcome—cannot possibly be a factor in whether that employer sets up a skunkworks or a division with employee ambidexterity in the short run. (More generally, the decisions you make today do not, and cannot, depend on anything that won’t be finalized until tomorrow.) So this choice, like option A, argues neither for nor against either of the two paradigms.

(D): The clearest connections to the two paradigms here is “special status ... of employees working on exploration projects” and “greater freedom ... of employees working on exploration projects”, which correspond fairly closely to the structural definitions of skunkworks and employee ambidexterity respectively. According to this choice,  IF  a either a skunkworks or a division of employees who’ve been granted employee ambidexterity happens to be housed in the same physical building (“same facility”) as mainstream divisions—and  IF  the employees in those mainstream divisions happen to be working 100% on exploitation (and 0% on exploration)—then the setup will negatively effect the job satisfaction of the exploitation workers as well as the overall cohesion of the company as a whole. In other words,  IF  the above logistical facts are true, then this choice weighs   against   setting up the skunkworks and/or ambidextrous division in those specific ways.
There are two fundamental problems here. First, the statements in this choice don’t have any definite bearing on either special paradigm unless the highly specific “IF” clauses above are true—and we’re not given any clear evidence that those clauses are, in fact, true. Second, more fundamentally, this choice contains possible factors  AGAINST BOTH  paradigms, which is not what the problem asks for (we want factors that weigh against one paradigm but  IN FAVOR  of the other one).

(E): This choice clearly argues in favor of the employee-ambidexterity paradigm, which very clearly satisfies the description of “giving employees a hand in their scheduling”. (In fact, the ‘ambidextrous’ employees are given complete individual control over their scheduling, not merely “a hand in” it.) On the other hand, the passage tells us nothing about whether skunkworks employees are given any input into their work schedules, so we have no way to detemine whether this choice has any relevance to the skunkworks paradigm.

The correct answer is (B).

4.  According to the passage, corporations that allocate less than the optimal proportion of resources to exploration are likely to

(A) find themselves in a highly favorable short-term financial position
 
(B) generate little profit overall as e result of insufficient aggregate technological capability

(C) have recently reduced total expenditure on their existing lines of production

(D) overspend on research and development for products that currently generate a profit

(E) weather large-scale changes in their respective markets better than firms that have committed a greater share of resources to existing exploration projects

This is an “according to the passage” problem, so the correct answer should reiterate the content of a relevant statement from the passage—most likely with substantial changes in phrasing and word choices, but without any logical transformations of the type seen in the answers to IMPLY/INFER/SUGGEST questions.

The “optimal balance” here refers to the optimal allocations of a manufacturer’s managerial and capital resources to each of two fundamentally contrasting goals:  exploitation  of the manufacturer’s current product lines, versus  exploration  of new markets, methods or products for its future expansion or evolution. 
These two categories together cover all of the manufacturer’s operations, so allocating more resources to exploration means allocating fewer to exploitation, and vice versa. Accordingly, if  exploration  expenditures “fall short of the prope balance”—i.e., if LESS than the optimal quantity of resources is being allocated to exploration—then EXCESS resources must currently be going to exploitation.

Thus, if we take an inventory of all stated consequences of 
• not allocating enough resources to exploration
OR
• allocating too many resources to exploitation,
then the correct answer should repeat an item from this inventory using different words.

Take inventory:

Stated consequences of allocating TOO FEW resources to EXPLORATION:
None. (The author has phrased everything in terms of the  excess  allocation, whichever one that is.)

Stated consequences of allocating TOO MANY resources to EXPLOITATION:
• Exceptionally productive and cost-efficient in the short run
• Uncommonly likely to fail / go bankrupt or out of business (“ruin”) in the long run

The first of these bullet points—high productivity, coupled with low costs relative to production—is an essential formula for financially successful business operations, so the correct answer is choice A.

INCORRECT ANSWERS:

(B) The single fact provided by the passage about firms in the situation described in the prompt is that they will enjoy high productivity and low unit costs (= high “cost efficiency”) in the immediate short term. This set of conditions is fundamentally in opposition to low profitability, so this choice is unsupported.

(C): When recombined with the prompt, this choice says that manufacturers that are currently spending  too much  on exploiting their  current  products must be spending LESS on those current production lines than they were in the recent past—in other words, that the overspend on exploiting current products  must  have been  even more severe  not very long ago. There is no textual support for this, of course, although this statement is so absurd that you can eliminate it on the basis of plain common sense alone. 
(Finally, we can notice that, if this statement WERE true, it would “crash” the overall logic by sending it into an infinite recursion: If the company is overspending on exploitation, then according to choice C, it must have been overspending even worse a short while ago. But then, applying choice B  again , going back a little further it must have been overspending even worse than THAT. And then, choice C can be applied yet again... infinitely many times, in fact. That’s nonsense, so choice C can’t be correct.)

(D): The author states that manufacturers that allocate  too many  resources to  exploration —the opposite of the situation in this prompt—will spend  too LITTLE  money per technology (“spread   funds far too thinly”) on research and development for currently profitable technologies. At a glance, choice D may appear to be a simplie rearrangement of the same statement—in roughly the same manner as  x < y  can be rewritten as  y  >  x —and thus a tempting answer choice.
That reasoning fails, however, because the simple arithmetic that underlies the insufficient R&D spend in the cited statement—if total R&D spend is a finite number and there are too many separate technologies, then (total R&D spend)/(# of technologies) is going to be too low—does not work in reverse: Having too  much  R&D money for too  few  technologies does NOT guarantee that  too much  money will be spent on R&D per technology, because the company can just spend less than the maximum R&D budget. So, choice B is not supported by the passage.
To come back briefly to baseline fundamentals, we can cut off the above line of reasoning at the point where “this looks like a simple rearrangement...”—because that type of rearrangement is the single key feature of solutions to IMPLY/INFER/SUGGEST questions that will   not   appear in other detail-level questions (“according to the passage”, “the author/passage indicates”, etc).

(E) The passage states that firms in the situation described by the prompt “face an unusually large probablity of ruin” in the face of large-scale market evolution, which is the exact opposite of what this choice says.

The correct answer is (A).

heyitsmepearl · Answer

The passage is talking about how corporates struggle to balance between two business objectives and then goes on to describe two different approaches that corporates take to mitigate this conflict. First being- one concentrated team works on one of the objectives, i.e., exploration and also presents a challenge for this approach. Second being- give employees a free hand to balance their time between the two objectives and presents a challenge for this too. The author has not expressed any personal opinion in this passage. The challenges have been mentioned from the perspective of critics.

1. The primary purpose of the passage is to

(A) describe a challenge in strategic management and analyze two possible approaches to it- this covers everything we mentioned above. He is "analyzing" the two approaches since he is giving pros and cons of both.
(B) explain and illustrate two types of corporate performance objectives that often come into conflict- yes, he did describe the conflict, but there was more to the passage than just this.
(C) lay out and analyze two types of ways in which corporations differentiate themselves when competing for managers and capital- out of scope
(D) present two solutions to a problem in corporate management and argue for one over the other- first past is good. However, the author did not present his own opinion anywhere.
(E) trace the origins of a particular conflict of interest commonly faced by newly established corporations- out of scope

heyitsmepearl · Answer

To be precise of the cons as pers the critics for the first approach were- "Critics, however, claim that innovations from a sequestered unit cannot produce returns until they and their underlying knowledge base are integrated into the company’s mainstream operations..."
In other words, there is NO WAY to produce returns from innovations OTHER THAN integrating the innovation into the company's operations. If we can find a way to produce returns without having to integrate, that will weaken this reasoning.

2. Which of the following, if true of skunkworks, most undermines the argument that the passage attributes to their critics?

(A) When the products or innovations they develop cannot easily be incorporated into the corporation’s main lines of business, they can typically be sold off to other firms at considerable capital gains.- THAT'S IT. Even if an innovation can't be integrated into the company's operations, we can still profit from it by selling it off. But let's hold it and check other options.

(B) Their products have much better prospects of integration into the corporation’s core business if their employees work three days per week in the skunkworks and two days per week in one of the corporation’s main departments than if they work in the skunkworks full-time.- this is questioning the very structure of this approach by saying that employees shouldn't do just skunkworks. No weakener here.

(C)) Their products and innovations tend to have more in common with those developed by startup companies, which do not have shareholders and are not expected to be profitable overall, than with their own corporation’s main output.- ok so products match are similar to start-up companies products but not as much to their corporation's output. If anything, this is a strengthener because this could mean that integration is tougher.

(D) Their employees typically share a considerable depth of knowledge or experience in one or more specialized areas, enabling them to develop products for narrowly defined niche markets.- Ok, so innovations may be great but what about integration?

(E) Their employees are normally paid large bonuses if any of their products or innovations are eventually integrated into the corporation’s larger main lines of production.- ok, so that's an incentive to get the products/innovations successfully integrated into the company's operations. This is a trap answer because it can look like incentive to integrate = integrate. We could incentivize people to make a road over the Atlantic ocean but that doesn't mean it can be successfully done.

Established manufacturers face a tension between exploiting their

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Established manufacturers face a tension between exploiting their

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