Firms traditionally claim that

Question

Firms traditionally claim that they downsize (i.e., make permanent personnel cuts) for economic reasons, laying off supposedly unnecessary staff in an attempt to become more efficient and competitive. Organization theory would explain this reasoning as an example of the “economic rationality” that it assumes underlies all organizational activities. There is evidence that firms believe they are behaving rationally whenever they downsize; yet recent research has shown that the actual economic effects of downsizing are often negative for firms. Thus, organization theory cannot adequately explain downsizing; non-economic factors must also be considered. One such factor is the evolution of downsizing into a powerful business myth: managers simply believe that downsizing is efficacious. Moreover, downsizing nowadays is greeted favorably by the business press; the press often refers to soaring stock prices of downsizing firms (even though research shows that stocks usually rise only briefly after downsizing and then suffer a prolonged decline). Once viewed as a sign of desperation, downsizing is now viewed as a signal that firms are serious about competing in the global marketplace; such signals are received positively by key actors— financial analysts, consultants, shareholders—who supply firms with vital organizing resources. Thus, even if downsizers do not become economically more efficient, downsizing’s  mythic properties  give them added prestige in the business community, enhancing their survival prospects.  The primary purpose of the passage is to

(A)criticize firms for engaging in the practice of downsizing
(B)analyze the negative economic impact of downsizing on firms
(C)offer an alternative to a traditional explanation for the occurrence of downsizing
(D)chronicle how perceptions of downsizing have changed over time
(E)provide evidence disputing the prevalence of downsizing

C
Can someone explain why the answer here is C and not D.

Q35: The passage suggests that downsizing’s mythic properties can be beneficial to a downsizing firm because these properties

A. allow the firm to achieve significant operating efficiencies
B. provide the firm with access to important organizing resources
C. encourage a long-term increase in the firm’s stock price
D. make the firm less reliant on external figures such as financial analysts and consultants
E. discourage the firm’s competitors from entering the global marketplace

B

Q36: The passage suggests which of the following about the claim that a firm will become more efficient and competitive by downsizing?

A. Few firms actually believe this claim to be true.
B. Fewer firms have been making this claim in recent years.
C. This claim contradicts the basic assumption of organization theory.
D. This claim is called into question by certain recent research.
E. This claim is often treated with skepticism by the business press.

D

According to the passage, the “key actors” (line 34) view a firm’s downsizing activities
as an indication of the firm’s
A. troubled financial condition
B. inability to develop effective long-term strategies
C. inability to retain vital organizational resources
D. desire to boost its stock price
E. desire to become more competitive

E

bkkanurag · Answer

Between option C and option D

Why C ?
The first 3-4 lines of the paragraph explain what the firms' traditional response to downsizing is and how that theory is in adequate. The later part of the paragraph gives us alternate non-economic reasoning to downsizing. So C

Why not D ?

D claims that the paragraph chronicles (should have aleast 2-3 changed views through the timeline) the change in perception of downsizing. This just lures the test taker into a trap.
Acknowledge the fact that not a single date or a year is mentioned in the paragraph. The illusion of changed perceptions is infact two theories as projected by option C.

Hope this helps !

Carcass · Answer

reading very carefully just one phrase will give you the main idea Hope this helps However with my disappointment I have to lock the topic because the rules for posting in RC section are pretty clear rc-forum-rules-must-read-155874.html Do not esitate to ask if something remains unclear via PVT. regards

JarvisR · Answer

Time Taken: 6:20
All correct.

Nikhil · Answer

Discussed here gmat-prep-rc-219516.html?fl=similar

Firms traditionally claim that

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