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08 Jan 2023, 12:51
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Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
95%
(hard)
Question Stats:
41% (02:09) correct
59%
(02:06)
wrong
based on 211
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Gally is aiming at starting a new business that offers annual contracts to repair and maintain pumps at refineries. These contracts will include services such as rebalancing, repairing the bearings, replacing the pump impellers as they wear out etc. Since Gally is a newcomer, it aims to gain market by offering contracts at reduced prices. Gally's management raises concerns that the revenue from these contracts will not be enough to cover their costs.
The answer to which of the following questions would help evaluate the management’s concerns?
A. Whether Gally can target new refineries, such as those built in the last 15 years with pumps that require fewer and relatively inexpensive maintenance actions
B. Whether Gally can acquire similar number of contracts without reducing its prices.
C. Whether Gally offers premium services that others charge at standard prices, at a very low cost.
D. Whether Gally targets refineries that are flush with money and can pay for repairs.
E. Whether Gally targets refineries where there is well documented repair records based on which Gally can reliably estimate the average annual repair costs.
The answer to which of the following questions would help evaluate the management’s concerns?
A. Whether Gally can target new refineries, such as those built in the last 15 years with pumps that require fewer and relatively inexpensive maintenance actions
B. Whether Gally can acquire similar number of contracts without reducing its prices.
C. Whether Gally offers premium services that others charge at standard prices, at a very low cost.
D. Whether Gally targets refineries that are flush with money and can pay for repairs.
E. Whether Gally targets refineries where there is well documented repair records based on which Gally can reliably estimate the average annual repair costs.
18 Jan 2023, 14:45
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Maria240895chile
E is not relevant to the argument at hand. How would a cost estimate be useful in knowing if the revenues from the contract would be enough to cover the costs? It is already known that the maintence costs would be quite expensive, and if the firm needs to cover those costs they would likely incur a loss.
A is a far better option - if the firm is able to acquire clients that require few repairs, then the reduced contract costs might not be a problem. If the opposite is true, then it might be a problem.
Hope that helps!
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RohitKakkar
18 Jan 2023, 23:14
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Premise-1 :- Gally is aiming at starting a new business that offers annual contracts to repair and maintain pumps at refineries.
Extra Info:- These contracts will include services such as rebalancing, repairing the bearings, replacing the pump impellers as they wear out etc.
Premise-2: Since Gally is a newcomer, it aims to gain market by offering contracts at reduced prices.
Mgmt Concern:- Gally's management raises concerns that the revenue from these contracts will not be enough to cover their costs.
We need to evaluate whether their concerns are true or not
A) Whether Gally can target new refineries, such as those built in the last 15 years with pumps that require fewer and relatively inexpensive maintenance action. If this is true then mgmt concern is false as they will save money and this is a good way of making money and gaining market share, If this is false then mgmt's concerns are true and they will not be able to cover their costs, Keep it.
B) Similar number of contracts won't solve their issue, Its not a high volume low margins game in management terms.
C) Premium or not, is not related to the passage
D) Refineries can pay the money but it is about the company that we are concerned
E) Can be a TRAP answer on the face of it, But records or no records the company will not be able to take out the money and cover its cost
A is the winner here
Extra Info:- These contracts will include services such as rebalancing, repairing the bearings, replacing the pump impellers as they wear out etc.
Premise-2: Since Gally is a newcomer, it aims to gain market by offering contracts at reduced prices.
Mgmt Concern:- Gally's management raises concerns that the revenue from these contracts will not be enough to cover their costs.
We need to evaluate whether their concerns are true or not
A) Whether Gally can target new refineries, such as those built in the last 15 years with pumps that require fewer and relatively inexpensive maintenance action. If this is true then mgmt concern is false as they will save money and this is a good way of making money and gaining market share, If this is false then mgmt's concerns are true and they will not be able to cover their costs, Keep it.
B) Similar number of contracts won't solve their issue, Its not a high volume low margins game in management terms.
C) Premium or not, is not related to the passage
D) Refineries can pay the money but it is about the company that we are concerned
E) Can be a TRAP answer on the face of it, But records or no records the company will not be able to take out the money and cover its cost
A is the winner here
