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29 Feb 2020, 01:57
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5th Q
A) whole passage spends half of it on disscusing the tangible capital of large manufacuturer while intangible capital takes the rest half. Why is answer A right, just mentioning the intangible capital? Both tangible and intangible capital are important because the tangbile decides potencial economies of scale and the intangible decides realized economies of scale.
A) whole passage spends half of it on disscusing the tangible capital of large manufacuturer while intangible capital takes the rest half. Why is answer A right, just mentioning the intangible capital? Both tangible and intangible capital are important because the tangbile decides potencial economies of scale and the intangible decides realized economies of scale.
PhantomAY
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Joined: 21 Jan 2020
Last visit: 01 May 2021
Posts: 58
Given Kudos: 31
Status:Aim for the moon. If you miss, you may hit a star.
Location: United States (IL)
Concentration: Strategy, General Management
Schools: Booth (Chicago) (A$) Kellogg PT '23 (A)
GMAT 1: 740 Q50 V40
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WE:Project Management (Healthcare/Pharmaceuticals)
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02 Mar 2020, 09:43
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Create process map first:
Paragraph 1: manufacturers need more than big plant to reach EoC - steady output. Intangible assets are important too.
Paragraph 2: how to invest in intangible assets. Exploiting full potential of big plants makes it harder for late moves to compete.
And then look at all answers:
1. The passage suggests that in order for a manufacturer in a capital-intensive industry to have a decisive advantage over competitors making similar products, the manufacturer must
A. be the first in the industry to build production facilities of theoretically optimal size refer to process map - the passage emphasizes just building big plants is not enough
B. make every effort to keep fixed and sunk costs as low as possible refer to process map - if companies don't have "steady output" this is not gonna work
C. be one of the first to operate its manufacturing plants at minimum efficient scale operational excellence is the suggestion, correct answer
D. produce goods of higher quality than those produced by direct competitors this helps in reality, but "quality" is not mentioned here as a success factor
E. stockpile raw materials at production sites in order to ensure a steady flow of such materials this menations "steady flow" but just stockpiling is not enough and not suggested by author
2. The passage suggests that which of the following is true of a manufacturer's fixed and sunk costs?
A. The extent to which they are determined by market conditions for the goods being manufactured is frequently underestimated. whether is underestimated is not mentioned
B. If they are kept as low as possible, the manufacturer is very likely to realize significant profits. you need "steady output" to realize profits
C. They are the primary factor that determines whether a manufacturer will realize economies of scale. they are factors but not "primary", be careful with extreme words.
D. They should be on a par with the fixed and sunk costs of the manufacturer’s competitors. bench-marking is not mentioned
E. They are not affected by fluctuations in a manufacturing plant’s throughput. correct answer, refer to "A manufacturer’s fixed costs and “sunk costs” (original capital investment in the physical plant) do not decrease when production declines"
3. In the context of the passage as a whole, the second paragraph serves primarily to
if you understand the tone (supporting) of 2nd paragraph, you can eliminate 4 incorrect answers very quickly
A. provide an example to support the argument presented in the first paragraph correct, the first paragraph mentioned "intangible" asset is very important, and the whole 2nd paragraph provides an example to test for that
B. evaluate various strategies discussed in the first paragraph there is no various strategies being discussed - and author didn't evaluate anything. In order to "evaluate" you need present both supporting examples and counter examples. The 2nd paragraph is just supporting
C. introduce evidence that undermines the argument presented in the first paragraph opposite direction "undermine"
D. anticipate possible objections to the argument presented in the first paragraph not possible objection is provided
E. demonstrate the potential dangers of a commonly used strategy no potential dangers are posed
4. The passage LEAST supports the inference that a manufacturer's throughput could be adversely affected by
A. a mistake in judgment regarding the selection of a wholesaler coincides with "inadequate supplies of raw materials"
B. a breakdown in the factory's machinery coincides with "problems on the factory floor"
C. a labor dispute on the factory floor coincides with "problems on the factory floor"
D. an increase in the cost per unit of output this is the result not the cause, the questions asks for a cause. And the increase in cost per unit produced doesn't necessarily mean throughput rate is lower
E. a drop in the efficiency of the sales network coincides with "inefficient sales networks"
5. The primary purpose of the passage is to
main idea question - as long as you get the point of EoC is achieved by both big scale and operation efficiency, you are fine here
A. point out the importance of intangible capital for realizing economies of scale in manufacturing correct answer - author highlights the importance of operation excellence which contributed mostly by intangible capital
B. show that manufacturers frequently gain a competitive advantage from investment in large manufacturing facilities this is not enough any more
C. argue that large manufacturing facilities often fail because of inadequate investment in both tangible and intangible capital this might be true, but not the main point. This might just be an example to support main idea
D. suggest that most new industries are likely to be dominated by firms that build large manufacturing plants early "building big plants is not enough"
E. explain why large manufacturing plants usually do not help manufacturers achieve economies of scale this is true, but most importantly author wants to highlight "what's more important". If the passage stops after proving "building big plants is not enough" and didn't open the later session to discuss "operational excellence", this might be the correct answer.
Paragraph 1: manufacturers need more than big plant to reach EoC - steady output. Intangible assets are important too.
Paragraph 2: how to invest in intangible assets. Exploiting full potential of big plants makes it harder for late moves to compete.
And then look at all answers:
1. The passage suggests that in order for a manufacturer in a capital-intensive industry to have a decisive advantage over competitors making similar products, the manufacturer must
A. be the first in the industry to build production facilities of theoretically optimal size refer to process map - the passage emphasizes just building big plants is not enough
B. make every effort to keep fixed and sunk costs as low as possible refer to process map - if companies don't have "steady output" this is not gonna work
C. be one of the first to operate its manufacturing plants at minimum efficient scale operational excellence is the suggestion, correct answer
D. produce goods of higher quality than those produced by direct competitors this helps in reality, but "quality" is not mentioned here as a success factor
E. stockpile raw materials at production sites in order to ensure a steady flow of such materials this menations "steady flow" but just stockpiling is not enough and not suggested by author
2. The passage suggests that which of the following is true of a manufacturer's fixed and sunk costs?
A. The extent to which they are determined by market conditions for the goods being manufactured is frequently underestimated. whether is underestimated is not mentioned
B. If they are kept as low as possible, the manufacturer is very likely to realize significant profits. you need "steady output" to realize profits
C. They are the primary factor that determines whether a manufacturer will realize economies of scale. they are factors but not "primary", be careful with extreme words.
D. They should be on a par with the fixed and sunk costs of the manufacturer’s competitors. bench-marking is not mentioned
E. They are not affected by fluctuations in a manufacturing plant’s throughput. correct answer, refer to "A manufacturer’s fixed costs and “sunk costs” (original capital investment in the physical plant) do not decrease when production declines"
3. In the context of the passage as a whole, the second paragraph serves primarily to
if you understand the tone (supporting) of 2nd paragraph, you can eliminate 4 incorrect answers very quickly
A. provide an example to support the argument presented in the first paragraph correct, the first paragraph mentioned "intangible" asset is very important, and the whole 2nd paragraph provides an example to test for that
B. evaluate various strategies discussed in the first paragraph there is no various strategies being discussed - and author didn't evaluate anything. In order to "evaluate" you need present both supporting examples and counter examples. The 2nd paragraph is just supporting
C. introduce evidence that undermines the argument presented in the first paragraph opposite direction "undermine"
D. anticipate possible objections to the argument presented in the first paragraph not possible objection is provided
E. demonstrate the potential dangers of a commonly used strategy no potential dangers are posed
4. The passage LEAST supports the inference that a manufacturer's throughput could be adversely affected by
A. a mistake in judgment regarding the selection of a wholesaler coincides with "inadequate supplies of raw materials"
B. a breakdown in the factory's machinery coincides with "problems on the factory floor"
C. a labor dispute on the factory floor coincides with "problems on the factory floor"
D. an increase in the cost per unit of output this is the result not the cause, the questions asks for a cause. And the increase in cost per unit produced doesn't necessarily mean throughput rate is lower
E. a drop in the efficiency of the sales network coincides with "inefficient sales networks"
5. The primary purpose of the passage is to
main idea question - as long as you get the point of EoC is achieved by both big scale and operation efficiency, you are fine here
A. point out the importance of intangible capital for realizing economies of scale in manufacturing correct answer - author highlights the importance of operation excellence which contributed mostly by intangible capital
B. show that manufacturers frequently gain a competitive advantage from investment in large manufacturing facilities this is not enough any more
C. argue that large manufacturing facilities often fail because of inadequate investment in both tangible and intangible capital this might be true, but not the main point. This might just be an example to support main idea
D. suggest that most new industries are likely to be dominated by firms that build large manufacturing plants early "building big plants is not enough"
E. explain why large manufacturing plants usually do not help manufacturers achieve economies of scale this is true, but most importantly author wants to highlight "what's more important". If the passage stops after proving "building big plants is not enough" and didn't open the later session to discuss "operational excellence", this might be the correct answer.
