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In corporate purchasing, competitive scrutiny is typically limited to

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In corporate purchasing, competitive scrutiny is typically limited to [#permalink]

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New post Updated on: 23 Sep 2017, 21:41
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In corporate purchasing, competitive scrutiny is typically limited to suppliers of items that are directly related to end products. With “indirect” purchases (such as computers, advertising, and legal services), which are not directly related to production, corporations often favor “supplier partnerships” (arrangements in which the purchaser forgoes the right to pursue alternative suppliers), which can inappropriately shelter suppliers from rigorous competitive scrutiny that might afford the purchaser economic leverage. There are two independent variables—availability of alternatives and ease of changing suppliers—that companies should use to evaluate the feasibility of subjecting suppliers of indirect purchases to competitive scrutiny. This can create four possible situations.

In Type 1 situations, there are many alternatives and change is relatively easy. Open pursuit of alternatives—by frequent competitive bidding, if possible—will likely yield the best results. In Type 2 situations, where there are many alternatives but change is difficult—as for providers of employee health-care benefits—it is important to continuously test the market and use the results to secure concessions from existing suppliers. Alternatives provide a credible threat to suppliers, even if the ability to switch is constrained. In Type 3 situations, there are few alternatives, but the ability to switch without difficulty creates a threat that companies can use to negotiate concessions from existing suppliers. In Type 4 situations, where there are few alternatives and change is difficult, partnerships may be unavoidable.


1. Which of the following best describes the relation of the second paragraph to the first?

A. The second paragraph offers proof of an assertion made in the first paragraph.
B. The second paragraph provides an explanation for the occurrence of a situation described in the first paragraph.
C. The second paragraph discusses the application of a strategy proposed in the first paragraph.
D. The second paragraph examines the scope of a problem presented in the first paragraph.
E. The second paragraph discusses the contradictions inherent in a relationship described in the first paragraph.



2. Which of the following can be inferred about supplier partnerships, as they are described in the passage?

(A) They cannot be sustained unless the goods or services provided are available from a large number of suppliers.
(B) They can result in purchasers paying more for goods and services than they would in a competitive-bidding situation.
(C) They typically are instituted at the urging of the supplier rather than the purchaser.
(D) They are not feasible when the goods or services provided are directly related to the purchasers' end products.
(E) They are least appropriate when the purchasers' ability to change suppliers is limited.



3. According to the passage, which of the following factors distinguishes an indirect purchase from other purchases?

(A) The ability of the purchasing company to subject potential suppliers of the purchased item to competitive scrutiny
(B) The number of suppliers of the purchased item available to the purchasing company
(C) The methods of negotiation that are available to the purchasing company
(D) The relationship of the purchased item to the purchasing company's end product
(E) The degree of importance of the purchased item in the purchasing company's business operation


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Originally posted by ankit0411 on 30 Sep 2012, 02:19.
Last edited by hazelnut on 23 Sep 2017, 21:41, edited 1 time in total.
Edited the question.
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Re: In corporate purchasing, competitive scrutiny is typically limited to [#permalink]

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New post 30 Sep 2012, 08:22
Also did the same mistake as yours @ankit.

I guess its all about the wording between the two options, now after re-reading it I can see the incorrect option has a wording of "Examining the Scope" v/s in correct option "Application of strategy".

My 2 cents now lie on this wording - This can create four possible situations.
This line suggests "Application" is better than "Examination"

Otherwise these are very close choices, If I would have got this RC in thick of time,my first gut would be {D} and I would move on not realizing I did a mistake. Ticking on {C} here would be the Differentiator in getting V40 and V37 !!!

Can RC gurus throw some Big Light for seekers like us!!!
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Re: In corporate purchasing, competitive scrutiny is typically limited to [#permalink]

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New post 30 Sep 2012, 08:25
2
methevoid wrote:
Also did the same mistake as yours @ankit.

I guess its all about the wording between the two options, now after re-reading it I can see the incorrect option has a wording of "Examining the Scope" v/s in correct option "Application of strategy".

My 2 cents now lie on this wording - This can create four possible situations.
This line suggests "Application" is better than "Examination"

Otherwise these are very close choices, If I would have got this RC in thick of time,my first gut would be {D} and I would move on not realizing I did a mistake. Ticking on {C} here would be the Differentiator in getting V40 and V37 !!!

Can RC gurus throw some Big Light for seekers like us!!!


I understand the difference, there is a very subtle shift of meaning between the two choices.

Even if we stick close to the scope of passage, it's really hard to differentiate.

anyone any thoughts on this ?
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Re: In corporate purchasing, competitive scrutiny is typically limited to [#permalink]

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New post 31 May 2015, 10:18
Outline of Passage
p1
There are two types of purchases - direct and indirect.
In direct - already competitive scrutiny exists.
In indirect - it doesn't
Author says thats in appropriate . If there is competitive scrutiny , it might save some money to purchasers
Now he says which factors should be used while evaluating whether to apply the competitive scrutiny:- availability of alternatives and ease of
changing suppliers

P2
He discuss 4 situations that arise on application of these 2 factors.

q1 - Which of the following best describes the relation of
the second paragraph to the first?
Answer C - The second paragraph discusses the
application of a strategy proposed in the first
paragraph.

reason - see outline of passage above
also the line - There are two independent variables—availability of alternatives and ease of changing suppliers—that companies should use to
evaluate the feasibility
of subjecting suppliers of indirect purchases to competitive scrutiny.

q2 - Which of the following can be inferred about supplier
partnerships, as they are described in the passage?
answer B - They can result in purchasers paying more for goods and services than they would in a competitive-bidding situation.
Check line - inappropriately shelter suppliers from rigorous competitive scrutiny that might afford the purchaser economic leverage

q3 - According to the passage, which of the following factors distinguishes an indirect purchase from other purchases?
answer D - The relationship of the purchased item to the purchasing company’s end product
check line - First 2 lines of para 1..
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Re: In corporate purchasing, competitive scrutiny is typically limited to [#permalink]

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New post 26 Apr 2017, 03:26
In corporate purchasing, competitive scrutiny is typically limited to suppliers of items that are directly related to end products. With “indirect” purchases (such as computers, advertising, and legal services), which are not directly related to production, corporations often favor “supplier partnerships”(arrangements in which the purchaser forgoes the right to pursue alternative suppliers),which can inappropriately shelter suppliers from rigorous competitive scrutiny that might afford the purchaser economic leverage. There are two independent variables—availability of alternatives and ease of changing suppliers—that companies should use to evaluate the feasibility of subjecting suppliers of indirect purchases to competitive scrutiny. This can create four possible situations.

In Type 1 situations, there are many alternatives and change is relatively easy. Open pursuit of alternatives—by frequent competitive bidding, if possible—will likely yield the best results. InType 2situations, where there are many alternatives but change is difficult—as for providers of employee health-care benefits—it is important to continuously test the market and use the results to secure concessions from existing suppliers. Alternatives provide a credible threat to suppliers, even if the ability to switch is constrained. In Type 3 situations, there are few alternatives, but the ability to switch without difficulty creates a threat that companies can use to negotiate concessions from existing suppliers. In Type 4 situations, where there are few alternatives and change is difficult, partnerships may be unavoidable.

P1 :- About Direct purchase. About indirect Purchase with strategy.
P2 :- Possible situations and its description.


In paragraph 1 : Two variables - X & Y (Suppose) - use to evaluate the feasibility of subjecting suppliers.
In paragraph 2 : Four situation - how can these X & Y variable can be used to evaluate.
Type X Y
1 Many Easy
2 Many Difficult
3 Few Not Difficult
4 Few Difficult
Above table is just summary of p2

Q35:Which of the following best describes the relation of the second paragraph to the first?
A. The second paragraph offers proof of an assertion made in the first paragraph.
B. The second paragraph provides an explanation for the occurrence of a situation described in the first paragraph.
C. The second paragraph discusses the application of a strategy proposed in the first paragraph.
D. The second paragraph examines the scope of a problem presented in the first paragraph.
E. The second paragraph discusses the contradictions inherent in a relationship described in the first paragraph.

"indirect purchase" mentioned in 1st para so need to read details about it.
IP - which are not directly related to production. and also for direct purchase it mentioned relationship between suppliers ans end products.

Q37:According to the passage, which of the following factors distinguishes an indirect purchase from other purchases?
* The ability of the purchasing company to subject potential suppliers of the purchased item to competitive scrutiny
* The number of suppliers of the purchased item available to the purchasing company
* The methods of negotiation that are available to the purchasing company
* The relationship of the purchased item to the purchasing company's end product (the only options match)
* The degree of importance of the purchased item in the purchasing company's business operations


Thanks,
Sujeet
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In corporate purchasing, competitive scrutiny is typically limited to [#permalink]

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New post 21 Oct 2017, 11:15
Sujeet07 wrote:
In corporate purchasing, competitive scrutiny is typically limited to suppliers of items that are directly related to end products. With “indirect” purchases (such as computers, advertising, and legal services), which are not directly related to production, corporations often favor “supplier partnerships”(arrangements in which the purchaser forgoes the right to pursue alternative suppliers),which can inappropriately shelter suppliers from rigorous competitive scrutiny that might afford the purchaser economic leverage. There are two independent variables—availability of alternatives and ease of changing suppliers—that companies should use to evaluate the feasibility of subjecting suppliers of indirect purchases to competitive scrutiny. This can create four possible situations.

In Type 1 situations, there are many alternatives and change is relatively easy. Open pursuit of alternatives—by frequent competitive bidding, if possible—will likely yield the best results. InType 2situations, where there are many alternatives but change is difficult—as for providers of employee health-care benefits—it is important to continuously test the market and use the results to secure concessions from existing suppliers. Alternatives provide a credible threat to suppliers, even if the ability to switch is constrained. In Type 3 situations, there are few alternatives, but the ability to switch without difficulty creates a threat that companies can use to negotiate concessions from existing suppliers. In Type 4 situations, where there are few alternatives and change is difficult, partnerships may be unavoidable.

P1 :- About Direct purchase. About indirect Purchase with strategy.
P2 :- Possible situations and its description.


In paragraph 1 : Two variables - X & Y (Suppose) - use to evaluate the feasibility of subjecting suppliers.
In paragraph 2 : Four situation - how can these X & Y variable can be used to evaluate.
Type X Y
1 Many Easy
2 Many Difficult
3 Few Not Difficult
4 Few Difficult
Above table is just summary of p2

Q35:Which of the following best describes the relation of the second paragraph to the first?
A. The second paragraph offers proof of an assertion made in the first paragraph.
B. The second paragraph provides an explanation for the occurrence of a situation described in the first paragraph.
C. The second paragraph discusses the application of a strategy proposed in the first paragraph.
D. The second paragraph examines the scope of a problem presented in the first paragraph.
E. The second paragraph discusses the contradictions inherent in a relationship described in the first paragraph.

"indirect purchase" mentioned in 1st para so need to read details about it.
IP - which are not directly related to production. and also for direct purchase it mentioned relationship between suppliers ans end products.

Q37:According to the passage, which of the following factors distinguishes an indirect purchase from other purchases?
* The ability of the purchasing company to subject potential suppliers of the purchased item to competitive scrutiny
* The number of suppliers of the purchased item available to the purchasing company
* The methods of negotiation that are available to the purchasing company
* The relationship of the purchased item to the purchasing company's end product (the only options match)
* The degree of importance of the purchased item in the purchasing company's business operations


Thanks,
Sujeet



In Q-37, Why is "C" wrong?
The methods of negotiation that are available to the purchasing company:- indirect purchase-partnerships may be unavoidable & other purchases(means direct purchase)-frequent competitive bidding... Doesn't "c" fit here? Can somebody explain...
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Re: In corporate purchasing, competitive scrutiny is typically limited to [#permalink]

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New post 24 Oct 2017, 08:30
1
maddy1234567890123 wrote:

In Q-37, Why is "C" wrong?
The methods of negotiation that are available to the purchasing company:- indirect purchase-partnerships may be unavoidable & other purchases(means direct purchase)-frequent competitive bidding... Doesn't "c" fit here? Can somebody explain...




Let me try to explain why C is wrong for Q37.

3. According to the passage, which of the following factors distinguishes an indirect purchase from other purchases?

(A) The ability of the purchasing company to subject potential suppliers of the purchased item to competitive scrutiny
(B) The number of suppliers of the purchased item available to the purchasing company
(C) The methods of negotiation that are available to the purchasing company
(D) The relationship of the purchased item to the purchasing company's end product
(E) The degree of importance of the purchased item in the purchasing company's business operation


Task is to find what factor differentiate indirect purchase from other (direct) purchases? This is an inference question, hence we should be able to prove same in passage. As its mentioned in the passage highlighted below, basis is whether purchased item will be used for end products.

In corporate purchasing, competitive scrutiny is typically limited to suppliers of items that are directly related to end products. With “indirect” purchases (such as computers, advertising, and legal services), which are not directly related to production, corporations often favor “supplier partnerships” (arrangements in which the purchaser forgoes the right to pursue alternative suppliers), which can inappropriately shelter suppliers from rigorous competitive scrutiny that might afford the purchaser economic leverage.

Option C . Method of negotiation... is not mentioned in passage as a factor to differentiate between indirect purchase and other (direct) purchases.

Hint:
A real time scenario to make this passage easy: Think about a car manufacturing company, which purchases tires from suppliers. So tire supplier can be direct one.

Hope this helps :)
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In corporate purchasing, competitive scrutiny is typically limited to [#permalink]

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New post 10 Dec 2017, 03:20
Took 7 mins 20 seconds , including almost 3 mins to read . All correct

1. Which of the following best describes the relation of the second paragraph to the first?
"this can create 4 situations" is, in the transcription at hand, at the beginning of the second paragraph. it's not in the first paragraph.

the first paragraph consists of a bunch of background, about a certain business strategy. the second paragraph goes into the possible consequences of employing that strategy, but certainly does not "prove" anything stated in the first paragraph.

A. The second paragraph offers proof of an assertion made in the first paragraph. -- It does not prove anything stated in first paragraph
B. The second paragraph provides an explanation for the occurrence of a situation described in the first paragraph. -- Incorrect -- it does not provide any such explanation
C. The second paragraph discusses the application of a strategy proposed in the first paragraph. -- Correct
D. The second paragraph examines the scope of a problem presented in the first paragraph. -- Incorrect - Paragraph 1 does a fine job of defining the scope of the issue. Paragraph 2 compartmentalizes what has already been defined into specific strategies and when to apply them.
E. The second paragraph discusses the contradictions inherent in a relationship described in the first paragraph. -- Incorrect -- no contradictions are discussed

2. Which of the following can be inferred about supplier partnerships, as they are described in the passage?
With “indirect” purchases (such as computers, advertising, and legal services), which are not directly related to production, corporations often favor “supplier partnerships” (arrangements in which the purchaser forgoes the right to pursue alternative suppliers), which can inappropriately shelter suppliers from rigorous competitive scrutiny that might afford the purchaser economic leverage.

(A) They cannot be sustained unless the goods or services provided are available from a large number of suppliers. --Incorrect
(B) They can result in purchasers paying more for goods and services than they would in a competitive-bidding situation. --Correct
(C) They typically are instituted at the urging of the supplier rather than the purchaser. -- Incorrect -- nowhere mentioned in passage
(D) They are not feasible when the goods or services provided are directly related to the purchasers' end products.-- Not necessarily -- it depends on the scenario
(E) They are least appropriate when the purchasers' ability to change suppliers is limited. -- Opposite -- they are most appropriate ..

3. According to the passage, which of the following factors distinguishes an indirect purchase from other purchases?
In corporate purchasing, competitive scrutiny is typically limited to suppliers of items that are directly related to end products. With “indirect” purchases (such as computers, advertising, and legal services), which are not directly related to production, corporations often favor “supplier partnerships”

(A) The ability of the purchasing company to subject potential suppliers of the purchased item to competitive scrutiny -- Incorrect -- companies favor supplier partnerships in case of indirect , but can still do if they want depending the cases
(B) The number of suppliers of the purchased item available to the purchasing company -- Incorrect
(C) The methods of negotiation that are available to the purchasing company -- Irrelevant
(D) The relationship of the purchased item to the purchasing company's end product -- Correct
(E) The degree of importance of the purchased item in the purchasing company's business operation -- Incorrect
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In corporate purchasing, competitive scrutiny is typically limited to   [#permalink] 10 Dec 2017, 03:20
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