Actually a reasonably interesting passage! And if you disagree, take some advice from a friend of mine: whenever you read RC, pretend that somebody you find incredibly attractive is reading this passage to you. Lol.
Anyway, whenever I start reading an RC passage, my main goal is to understand the structure of the argument. Why is each part of this passage there? I don't really give a crap about the details yet -- they'll be on the screen if I need them. I mostly just want to know how the author is constructing his or her argument.
This particular passage is a one-paragraph blob, but there's still some structure here. Let's break this sucker down sequentially -- since we'll need to understand the structure if we want to dive into the passage's primary purpose:
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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...
The author is just telling us about firms' traditional claims of downsizing in these first few sentences, and how it connects to organizational theory. And then the word "yet" catches my eye. Looks like we're heading for some sort of counter-claim...
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... 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.
That's nice and clear: the author is saying that firms' traditional claim -- that downsizing is economically rational -- isn't really the whole story, and that we need to consider non-economic factors. This seems like a really, really key part of the passage. Continuing...
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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.
And here we have an explanation of the non-economic factors: downsizing is "greeted favorably by the business press", it is "viewed positively by key actors", and its "mythic properties give [firms] added prestige in the business community." So even though downsizers don't become more economically efficient, there's a "powerful business myth" surrounding downsizing -- and that confers benefits to firms.
To summarize, the passage proceeds in this order:
1) describes the traditional claim firms make about downsizing -- it's economically rational, as suggested by organization theory
2) pivot: since economic consequences are negative, organization theory can't explain downsizing; need to consider non-economic factors
3) explains those non-economic factors ("mythic properties give firms added prestige", etc.)
On to your questions:
Quote:
2) 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
OA:C , Could you please explain why not B?
Only a small sliver of the passage deals with the negative economic impact of downsizing, and there's really no analysis of the negative economic impact itself. It's only mentioned as evidence to debunk firms' traditional claims for the purpose of downsizing. The rest of the passage goes on to explain the real reasons for downsizing.
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Hi, can someone please just briefly give an idea why primary purpose is not D? I almost always get the primary purpose incorrect
There's really no mention of how perceptions of downsizing have changed over time. Sure, the passage references perceptions of downsizing -- the business press, for example, seems to love downsizing -- but those perceptions don't really change over time. Instead, the passage is focused on the alternative ("non-economic") reasons why firms downsize.
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3) 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.
Could you please explain why not B?
The passage mentions that the traditional claim (that downsizing leads to efficiency) is wrong, and discusses why firms nevertheless choose to downsize. There's no indication that firms have changed their behavior: "There is evidence that firms believe they are behaving rationally whenever they downsize... managers simply believe that downsizing is efficacious." Notice that both of these statements are in the present tense, so firms presumably still believe that downsizing leads to greater efficiency. ("Efficacious" is basically a pretentious synonym for "effective.")
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4)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
OA:B Why not C?
(C) is directly contradicted by the passage:
Quote:
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)
Happy reading, everybody!
For question 3, the research is contradicting that downsizing doesnt help "economically" it never says that downsizing is not helping cos efficiency and say that firm will not be competitive with downsizing. infact after the result of the research the author goes on to explain that there could be other factors that could be deemed "significant" apart from economics.