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Marketing executive for Magu Corporation: Whenever Magu opens a manufacturing facility in a new city, the company should sponsor, or make donations to, a number of nonprofit organizations in that city. Doing so would improve Magu's image in the community, and thus the money spent on such charitable ventures would lead to increased sales.

The inherent gap here is that the Mrktg. Exec is assuming that the improved image will convert to increased sales. This is not necessarily true. There can still be competing brands that offer better products than Magu Corporation and maybe customers would buy the products of these competing brands.

Which statement would, if true, point to the most serious weakness in the marketing executive's advice?

(A) Magu sells its products internationally, so sales in any one city represent only a small portion of total revenue - Even if the sales represent a small portion of the total revenue, we cannot directly assume that it is insignificant portion. An increased sales in one city can still be a good source of revenue for Magu. But the question is to weaken the advice, which is 'Whenever Magu opens a manufacturing facility in a new city, the company should sponsor, or make donations to, a number of nonprofit organizations in that city'. The executive's advice still holds and we have no reason to doubt this advice - Reject

(B) Spending on charitable ventures would require Magu to decrease direct advertisements, which are the most effective means of reaching its target customers - This attacks the assumption the executive seems to have made - 'improved image converts to increased sales'. What this option tells us is that 'the most effective means of reaching its target customers is direct advertisements'. By decreasing spending on direct advertisements, Magu is already losing out on customers. Even if it gains new customers via the long shot of improving image, all that may do is compensate for the lost sales through less spending on direct advertisements. Thus there would actually be no 'increased' sales as such. This is a definite weakener.

(C) If market conditions change, Magu may have to close any such facility or relocate it - Though relocation may call for additional cost for Magu, relocation wouldn't void the executive's advice. Magu still can work to improve its image via donations to non profits and expect improved sales. The very fact that Magu may have to close any facility or relocate doesn't give us a reason to doubt the executive's advice. - Reject

(D) Some nonprofit organizations are poorly organized, so money donated to them would be of little benefit to the community - Does Magu donates to these 'some' nonprofit organizations? We don't know. Even if it does donate to these nonprofit organizations, the fact that the money benefits only little to the community doesn't mean that Magu's image in the community won't be improved. The community may very well blame the poor organization and poor usage of donated money on the nonprofit org itself. Again, no reason to doubt executive's advice. Reject

(E) If workers at the manufacturing facility believed their wages or working conditions were poor, their complaints would outweigh any good impressions generated by Magu's donations or sponsorships. - 'if' this was the case, then it would outweigh'. Did the workers at the mfg facility believe that their wages or working conditions were poor? We don't know. Does this option give us a reason to doubt? Yes it does. But it only does for a specific scenario whose probability of occurrence is not given. That is, workers at the manufacturing facility may believe or not believe that their wages or working conditions were poor. Reject
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From Manhattan:

Step 1: Identify the Question

The words serious weakness in the question stem indicate a Weaken the Argument question.


Step 2: Deconstruct the Argument

open manu fac in new city → $ to local nonprofits → improve image

© Increased sales


Step 3: Pause and State the Goal

On Weaken questions, the correct answer should make the conclusion less likely to be valid.


Step 4: Work from Wrong to Right

(A) The conclusion only claims that sales will increase through the plan, but not how much they will increase. Even if sales in a particular community only represent a small portion of Magu’s sales, overall sales would increase if contributing to local nonprofits does improve Magu’s image and increases sales in that particular community.

(B) CORRECT. The argument claims that contributing to nonprofits will increase sales. This sales increase is less likely if the money contributed to nonprofits reduces money available for direct advertising, the most effective way to reach customers.

(C) A facility closure might affect Magu’s profits or sales in the future, but it is not relevant to whether this plan to contribute to nonprofits will increase sales.

(D) Magu’s plan does not rely on the nonprofits actually doing productive things with the contributions. The plan is a success if the charitable contributions ultimately increase sales.

(E) This answer presents another factor, wages and working conditions, that could reduce sales. Thus, if Magu’s donations to nonprofits caused lower wages or poor working conditions at the company, this answer would weaken the argument. But the argument does not suggest that the plan to donate to local nonprofits will affect wages or working conditions.
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For answer choice C, in which the GMAC reasons that just because one of these new facilities may need to be relocated does not mean that the plan will not work, is the reasoning here for example that the company could have built customer rapport during the time it was in a specific community... thus leading to long-term customers, translating to increased sales?

Could another reason that this is incorrect be that during the short-term the facility was there, the company did increase sales by donating to organizations because the question does not specify a timeframe on the sustainability of sales...just an increase?

I may be overthinking this, but the GMAC's wording for why this is incorrect is vague, so I am just hoping for some more color. Many thanks in advance!
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For answer choice C, in which the GMAC reasons that just because one of these new facilities may need to be relocated does not mean that the plan will not work, is the reasoning here for example that the company could have built customer rapport during the time it was in a specific community... thus leading to long-term customers, translating to increased sales?

Could another reason that this is incorrect be that during the short-term the facility was there, the company did increase sales by donating to organizations because the question does not specify a timeframe on the sustainability of sales...just an increase?

I may be overthinking this, but the GMAC's wording for why this is incorrect is vague, so I am just hoping for some more color. Many thanks in advance!
The plan is simple.

When we have a manufacturing facility, we should support nonprofit organizations in the city in which that facility is located because doing so will result in an improved image and increased sales.

Let's consider choice (C).

(C) If market conditions change, Magu may have to close any such facility or relocate it.

What (C) says is essentially that a facility in a city may not exist in that city forever. Notice that, regardless of whether a facility will exist in a city forever, supporting nonprofit organizations where that facility exists could result in an improved image and increased sales. Right?

Maybe the sales will increase and remain at an increased level even after the facility ceases to exist in that city. Maybe sales will be at an increased level only while the facility exists in that city. OK, either way, sales will have increased. So, the plan will have worked.

Thus, choice (C) casts no doubt whatsoever on the effectiveness of the plan.
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KarishmaB

Can you please help me understand why E is incorrect?
I am not convinced with the reasoning that conditional statement can't weaken an argument.

E) If workers at the manufacturing facility believed their wages or working conditions were poor, their complaints would outweigh any good impressions generated by Magu's donations or sponsorships

If the workers complaints, the image in the community will not be improved. We can expect no increase in sales. So charity is not a good option because even if we do charity, there is risk of losing good impressions.
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The most serious weakness in the marketing executive's advice would be pointed out by option (B): "Spending on charitable ventures would require Magu to decrease direct advertisements, which are the most effective means of reaching its target customers."

This statement highlights a potential conflict between investing in charitable ventures and allocating resources towards direct advertisements, which the executive acknowledges as the most effective means of reaching the target customers. If Magu reduces its direct advertising to fund the charitable initiatives, it may result in a decrease in brand exposure and customer engagement. The impact on sales might not be offset by the positive image gained through the charitable donations, especially if the reduced advertising leads to a decline in reaching the target audience effectively.

Option (A) mentions that sales in any one city represent only a small portion of total revenue, which suggests that the impact of local charitable ventures on overall sales might be limited. However, this does not necessarily weaken the marketing executive's advice, as a positive brand image can still have broader effects beyond a specific city.

Option (C) discusses the possibility of market conditions changing, which could lead to the closure or relocation of the facility. While this could impact the long-term viability of charitable ventures, it does not directly undermine the executive's advice about improving Magu's image through local sponsorships or donations.

Options (D) and (E) raise potential concerns about the effectiveness of the charitable ventures and the perception of Magu's actions by the community and workers. However, they do not directly challenge the argument that spending on charitable ventures would lead to increased sales.
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Hi MartyMurray egmat ,

Can you kindly explain why E is not correct?

Let me explain why I eliminated B & selected E.
Argument :-
Doing so("donation to NGOs") would improve Magu's image in the community, and thus the money spent on such charitable ventures would lead to increased sales.

Prethinking:
So, Good image probably helping Magu Corp. to boost up sales.
To weaken the argument , I was looking for option that says:
1) Good Image is not helping to boost up sales.
Like there may be other concern/side effect with donations which is impacting sales
Or
2) may be good image is not at all created & hence no increased sales.

Option Evaluation:
I was left with Option B & E which aligns with my pre-thinking.
Option B says:
"Spending on charitable ventures would require Magu to decrease direct advertisements, which are the most effective means of reaching its target customers."
So if the direct advertisement is affected, sales will not increase.That makes sense.
But if direct advertisement leads to 50 qty. sale but good image leads to 300 qty. sale. Sale is still increasing here though direct advertisement is affected!!!!
But if direct advertisement leads to 200 qty. sale but good image leads to 100 qty. sale. Sale is not increasing here as direct advertisement is affected!!!!
That's why eliminated B as it can increase the sale or decrease the sale based on above cases.

Option E says:
Image is not improved due to employee compliant & it outweighs the good image created by donation to NGOs.
So Improved image cannot be the cause of increased sale.
So it is weakening the argument. Hence selected option E as weakner.

Kindly let me know where I am incorrect in comprehending & analysis. Thanks!
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Hi MartyMurray egmat ,

Can you kindly explain why E is not correct?
Here's the issue with (E).

The situation described by (E), in which "workers at the manufacturing facility believed their wages or working conditions were poor" would exist on its own, regardless of whether Magu sponsors or makes donations to nonprofits.

So, let's say Magu opens a new facility at which "workers at the manufacturing facility believed their wages or working conditions were poor." The result would be the following:

    new facility - complaints = sales outcome

Now, let's add sponsorships or donations. We now have the following:

    new facility - complaints + sponsorships or donations = higher sales outcome

We see that, while complaints have a negative effect, sponsorships or donations still cause sales to be HIGHER THAN THEY WOULD HAVE BEEN.

So, (E) does not cast doubt on the conclusion.

Regarding (B), we have the following without sponsorships or donations:

    new facility + advertisements = sales outcome

With sponsorships or donations, we have the following:

    new facility + reduced advertisements + sponsorships or donations = sales outcome

While it's true that having a more positive image may do more for Magu than advertising, (B) casts doubt on the conclusion because the negative effect of the reduction in advertising may more than offset the positive effect of the sponsorships or donations. So, though we don't know what the outcome will be, we now WONDER WHAT IT WILL BE.

Thus, the correct answer is (B).
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AvikSaha
Hi MartyMurray egmat ,

Can you kindly explain why E is not correct?
Here's the issue with (E).

The situation described by (E), in which "workers at the manufacturing facility believed their wages or working conditions were poor" would exist on its own, regardless of whether Magu sponsors or makes donations to nonprofits.

So, let's say Magu opens a new facility at which "workers at the manufacturing facility believed their wages or working conditions were poor." The result would be the following:

    new facility - complaints = sales outcome

Now, let's add sponsorships or donations. We now have the following:

    new facility - complaints + sponsorships or donations = higher sales outcome

We see that, while complaints have a negative effect, sponsorships or donations still cause sales to be HIGHER THAN THEY WOULD HAVE BEEN.

So, (E) does not cast doubt on the conclusion.

Regarding (B), we have the following without sponsorships or donations:

    new facility + advertisements = sales outcome

With sponsorships or donations, we have the following:

    new facility + reduced advertisements + sponsorships or donations = sales outcome

While it's true that having a more positive image may do more for Magu than advertising, (B) casts doubt on the conclusion because the negative effect of the reduction in advertising may more than offset the positive effect of the sponsorships or donations. So, though we don't know what the outcome will be, we now WONDER WHAT IT WILL BE.

Thus, the correct answer is (B).
­

Hi MartyMurray

Thanks for the explanation.

Is my below understanding correct ?

Let's suppose company sales before donations is 100mn.

After spending 1mn on sponsporship or donation, net sales increased by 20mn.

As per Option E the workers complaints outweigh the impressions of donations (and thus suppose offset and further decrease the increased sales due to the donations).

New (NET) sales = 100mn +20mn(Sales increased due to donations) - 30mn(sales offset by worker's complaint) = 90mn 

Despite a net decrease in net sales of 10 million, the overall sales have increased by 20 million due to charitable donations. The argument "the money spent on such charitable ventures would lead to increased sales." is still valid. Even there is no increase in net sales.­­­­­­­­­
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Hi MartyMurray

Thanks for the explanation.

Is my below understanding correct ?

Let's suppose company sales before donations is 100mn.

After spending 1mn on sponsporship or donation, net sales increased by 20mn.

As per Option E the workers complaints outweigh the impressions of donations (and thus suppose offset and further decrease the increased sales due to the donations).

New (NET) sales = 100mn +20mn(Sales increased due to donations) - 30mn(sales offset by worker's complaint) = 90mn 

Despite a net decrease in net sales of 10 million, the overall sales have increased by 20 million due to charitable donations. The argument "the money spent on such charitable ventures would lead to increased sales." is still valid. Even there is no increase in net sales.­­­­­­­­­
­Yes, your example perfectly illustrates what's going on with (E).­
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KarishmaB
Bunuel
Marketing executive for Magu Corporation: Whenever Magu opens a manufacturing facility in a new city, the company should sponsor, or make donations to, a number of nonprofit organizations in that city. Doing so would improve Magu's image in the community, and thus the money spent on such charitable ventures would lead to increased sales.

Which statement would, if true, point to the most serious weakness in the marketing executive's advice?

A. Magu sells its products internationally, so sales in any one city represent only a small portion of total revenue.
B. Spending on charitable ventures would require Magu to decrease direct advertisements, which are the most effective means of reaching its target customers.
C. If market conditions change, Magu may have to close any such facility or relocate it.
D. Some nonprofit organizations are poorly organized, so money donated to them would be of little benefit to the community.
E. If workers at the manufacturing facility believed their wages or working conditions were poor, their complaints would outweigh any good impressions generated by Magu's donations or sponsorships.


CR74231.01
OG2020 NEW QUESTION

In a new city, sponsor/donate to non-profits to improve image and hence, increase sales.
So say, spend 1 mil in donations and sales will go up from 100 mil to 110 mil. So a 1 mil donation could rake in $10 mil in revenue.

What points to a weakness in the advice?

A. Magu sells its products internationally, so sales in any one city represent only a small portion of total revenue.

We could be spending a small portion in donations too. It's all relative.

B. Spending on charitable ventures would require Magu to decrease direct advertisements, which are the most effective means of reaching its target customers.

Spending 1 mil on donations will take away that money from direct advertisements. Say, direct advertisements bring in 20 mil for every 1 mil spent (they are the most effective) while 1 mil donated brings in only 10 mil. So the revenue might actually go down because direct advertisements will decrease. If Magu were spending 5 mil in direct advertisements to get $100 mil, now we may allocate only 4 mil to direct advertisement brining in $80 mil and 1 mil to donations bringing in $10 mil so we might bring in a revenue of only $90 mil.
This is a weakness in the plan.

C. If market conditions change, Magu may have to close any such facility or relocate it.

Irrelevant.

D. Some nonprofit organizations are poorly organized, so money donated to them would be of little benefit to the community.

Irrelevant.

E. If workers at the manufacturing facility believed their wages or working conditions were poor, their complaints would outweigh any good impressions generated by Magu's donations or sponsorships.

Again irrelevant. There will be N number of factors which will work in the company's favour and M number of factors which will work against it. Sum total of all would decide the revenue. The argument just says that one of these N factors could be donations.

Answer (B)

Hi KarishmaB

I am a bit confused between your reasoning on option B and option E.
Your reasoning on option E says that we only deal with effect of "donation" on sales and there can be M+N other factors, the same reasoning can be also be applied on option B where we can just see the impact of "spending on charitable ventures" and don't see the impact of "direct advertising", if we see through this lens then option B won't be a weakener as positive effect of "donation" still exists instead of combined effect from donation + direct advertisements which is similar to effect from M+N factors. Do you agree with my confusion? If yes then could you provide more clarity here please?
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For all that have chosen E probably made the same mistake I did in identifing the main arguments as: improved image through charity = increase in sales.

However, the critical part here is "thus the money spent on such charitable ventures would lead to increased sales."

So instead, the main argument is that money spent on charity is a good investment which will increase sales.

B) Spending on charitable ventures would require Magu to decrease direct advertisements, which are the most effective means of reaching its target customers.
This choice clearly says direct advertisment is superior to any other possible marketing activity (including donating to charity and increasing the image) the company can do.

E) If workers at the manufacturing facility believed their wages or working conditions were poor, their complaints would outweigh any good impressions generated by Magu's donations or sponsorships.
This choice only tell us something about the image, but nothing about what is the best way to spent our advertisment budget on.
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