GMAT Question of the Day - Daily to your Mailbox; hard ones only

It is currently 13 Nov 2018, 16:38

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Close

Request Expert Reply

Confirm Cancel
Events & Promotions in November
PrevNext
SuMoTuWeThFrSa
28293031123
45678910
11121314151617
18192021222324
2526272829301
Open Detailed Calendar
  • Essential GMAT Time-Management Hacks

     November 14, 2018

     November 14, 2018

     07:00 PM PST

     08:00 PM PST

    Join the webinar and learn time-management tactics that will guarantee you answer all questions, in all sections, on time. Save your spot today! Nov. 14th at 7 PM PST
  • $450 Tuition Credit & Official CAT Packs FREE

     November 15, 2018

     November 15, 2018

     10:00 PM MST

     11:00 PM MST

    EMPOWERgmat is giving away the complete Official GMAT Exam Pack collection worth $100 with the 3 Month Pack ($299)

Firms traditionally claim that

  post reply Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
VP
VP
User avatar
B
Joined: 24 Aug 2011
Posts: 1400
Location: India
Concentration: Technology, Strategy
GMAT 1: 760 Q50 V42
GPA: 3.35
WE: Consulting (Computer Software)
GMAT ToolKit User Premium Member Reviews Badge
Firms traditionally claim that  [#permalink]

Show Tags

New post Updated on: 10 Jul 2015, 10:40
7
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



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.



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



_________________

ISB Preparation Kit | GMAT Debrief


Originally posted by ankurgupta03 on 22 Jun 2014, 19:47.
Last edited by JarvisR on 10 Jul 2015, 10:40, edited 2 times in total.
Formatted the Para and added a missing Q
Intern
Intern
avatar
Joined: 05 Mar 2014
Posts: 8
Re: Firms traditionally claim that  [#permalink]

Show Tags

New post 22 Jun 2014, 20:00
5
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 ! :)
Board of Directors
User avatar
P
Joined: 01 Sep 2010
Posts: 3312
Re: Firms traditionally claim that  [#permalink]

Show Tags

New post 23 Jun 2014, 03:38
reading very carefully just one phrase will give you the main idea

Quote:
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.


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
_________________

COLLECTION OF QUESTIONS AND RESOURCES
Quant: 1. ALL GMATPrep questions Quant/Verbal 2. Bunuel Signature Collection - The Next Generation 3. Bunuel Signature Collection ALL-IN-ONE WITH SOLUTIONS 4. Veritas Prep Blog PDF Version 5. MGMAT Study Hall Thursdays with Ron Quant Videos
Verbal:1. Verbal question bank and directories by Carcass 2. MGMAT Study Hall Thursdays with Ron Verbal Videos 3. Critical Reasoning_Oldy but goldy question banks 4. Sentence Correction_Oldy but goldy question banks 5. Reading-comprehension_Oldy but goldy question banks

Senior Manager
Senior Manager
avatar
Joined: 05 Nov 2012
Posts: 456
Concentration: Technology, Other
GMAT ToolKit User Premium Member Reviews Badge
Re: Firms traditionally claim that  [#permalink]

Show Tags

New post 10 Jul 2015, 10:41
Time Taken: 6:20
All correct.
MBA Section Director
User avatar
D
Affiliations: GMATClub
Joined: 22 May 2017
Posts: 948
Concentration: Nonprofit
GPA: 4
WE: Engineering (Computer Software)
Re: Firms traditionally claim that  [#permalink]

Show Tags

New post 21 Oct 2018, 19:44
GMAT Club Bot
Re: Firms traditionally claim that &nbs [#permalink] 21 Oct 2018, 19:44
Display posts from previous: Sort by

Firms traditionally claim that

  post reply Question banks Downloads My Bookmarks Reviews Important topics  


cron
Copyright

GMAT Club MBA Forum Home| About| Terms and Conditions and Privacy Policy| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.