Metro Ballet Company presents high-quality productions of traditional

Question

Metro Ballet Company presents high-quality productions of traditional, classical ballet. For the past several years, however, the company’s overall profits have been declining, and ticket sales have been flat. Annual audience surveys indicate that a majority of those who attend Metro Ballet productions consistently enjoy the performances and prefer classical ballet to other forms of dance; almost all of them have been attending Metro Ballet for several years. General surveys of area residents indicate, however, that very few are aware of Metro Ballet productions, and most imagine that the performances are boring and the tickets too expensive. In an effort to appeal to a wider audience, over the past decade the company has spent increasing amounts of money on spectacular stage productions, while lowering ticket prices.

In the first column, select the strategy that, in the absence of the other alternatives listed, would lead most directly to decreasing Metro Ballet’s expenses for its classical ballet productions. In the second column, select the strategy that, in the absence of the other alternatives listed, would constitute the most direct approach to solving the problem of increasing audience size for Metro Ballet’s classical ballet productions. Make only two selections, one in each column.

ID: 100403

Apt0810 · Answer

Decrease expenses: Return spending on productions to levels of several years ago

The compay should reduce the expenses since even the company increased the spending on spectacular performances ,it is not able to gather a good number of audience.

Increase audience size: Mount a local advertising campaign emphasizing the affordability and excitement of Metro Ballet's spectacular stage productions

In order to increase audience size it would be good if the company can do some kind of advertising in order to generate awareness among the people (survey of local residents shows that)

Posted from my mobile device

sameerm22 · Answer

Please explain why " Obtain public funding to double the spending on stage productions without increasing ticket prices " is not the right choice for "Decrease Expenses".

I understand that although the company has been spending money since past decade in stage productions (evident from the last statement), it is still not making profits (first two lines). However, it is not clear whether the company has concluded this investment as a bad strategy or good strategy. It feels like that correct answer choice given assumes that the company has already assumed that this investment over past decade is a bad strategy and thus obtaining public funding would still increase expenses. However, we do not that... the company has decided this to be a bad strategy. It could still be a good strategy, and the company may still want to that out... in doing so, obtaining public funding would be effective to reduce expenses.

SvelteNigerian · Answer

Hello, the reason why I reckon the option you are speaking about to be an incorrect answer is because raising funding has inherent costs attached to it. I may be bringing my investment banking knowledge into this but if you were to raise equity funding, the cost of the capital raise itself needs to be considered. If you were to raise debt funding then the cost of the capital raise plus the interest expense on the debt also needs to be considered.

Beyond this, I think it is cheaper to return spending to previous levels than it is to raise funding especially because the argument has clearly told us that the new stage productions have done little to increase attendance at the concerts and thus has contributed little to revenues.

Sajjad1994 · Answer

Official Explanation

This requires consideration of all the strategy options to determine which one would lead most directly to decreasing expenses for Metro Ballet’s classical ballet productions. Obtaining public funding to double the spending on stage productions without increasing ticket prices would lead to an increase in expenses for ballet productions, although those expenses should be offset by public funding. If expanding productions to include modern, folk, and tap dance traditions had the effect of decreasing expenses associated with ballet, that effect would be indirect. Offering discounts to reward people who have attended the greatest number of performances would likely reduce revenue and therefore increase expenses associated with ballet productions. Mounting an advertising campaign emphasizing the affordability and excitement of the ballet’s spectacular productions should increase expenses in the short term, although it may lead to increased revenue in the long term. Only the strategy of returning spending on productions to the level of several years ago has the immediate effect of decreasing expenses associated with classical ballet productions.

The correct answer is Return spending on productions to levels of several years ago.

It is again necessary to consider all the options. It is unclear how the strategy of doubling spending on stage productions without raising ticket prices would address the problem of attracting a larger audience, unless the process of obtaining public funding entailed an advertising campaign. Since the current audience has become accustomed to lavish productions, a reduction in spending on ballet productions might have the effect of actually reducing that audience. Expanding productions to include different dance traditions might attract a larger audience, but only if these traditions appeal to people not currently attending Metro Ballet, and only if they are made aware of the new productions. Since most people in the current audience have already been attending Metro Ballet productions for a number of years, offering discounts to those who have already attended a great number of performances may reinforce their loyalty, but is unlikely to attract people who haven’t previously attended. An advertising campaign aimed at addressing the reasons why area residents surveyed don’t currently attend, however, would constitute the most direct attempt to increase audience size among the options listed.

The correct answer is Mount a local advertising campaign emphasizing the affordability and excitement of Metro Ballet’s spectacular stage productions.

jin.h · Answer

According to the Official GMAT answer explanation,  "Obtaining public funding to double the spending on stage productions without increasing ticket prices (option A) would lead to an increase in expenses for ballet productions, although those expenses should be offset by public funding."

Hope this help.

Raman109 · Answer

Obtain public funding to double the spending on stage productions without increasing ticket prices - This would increase the expenses. No.

Return spending on productions to levels of several years ago - yes. They have been increasing their investment in stage performances and lowering the number of tickets, which explains the lower profits. So, moving back to lower spending would reduce the expenses.

Expand productions to include modern, folk, and tap dance traditions - Yes, this is a strategy, but the question is about expanding " increasing audience size for Metro Ballet's classical ballet productions. This is basically out of scope.

Offer special discounts to reward people who have attended the greatest number of performances - No.

Mount a local advertising campaign emphasizing the affordability and excitement of Metro Ballet's spectacular stage productions - yes. Because most locals imagine that the performances are boring and tickets too expensive

SMQazi · Answer

Some excerpts explaining the choices.

Situation 1:  General surveys of area residents indicate, however, that very few are aware of Metro Ballet productions
 
Conclusion 1: Ballet has not been properly advertised.

Situation 2:  most imagine that the performances are boring and the tickets too expensive 
Conclusion2: It would be difficult to get public funding, since people find the production boring anyway.

Fact 1:  Annual audience surveys indicate that a majority of those who attend Metro Ballet productions consistently enjoy the performances and prefer classical ballet to other forms of dance

A. Obtain public funding to double the spending on stage productions without increasing ticket prices - No  (conclusion 2 ) 
B. Return spending on productions to levels of several years ago. - Yes  (directly affects spending) 
C. Expand productions to include modern, folk, and tap dance traditions. - No  (irrelevant without advertising. Waste of resources due to Fact 1) 
D. Offer special discounts to reward people who have attended the greatest number of performances. No  (does not support bringing in new audience, no effect on existing audience, since they have been enjoying the show for years anyway) 
E. Mount a local advertising campaign emphasizing the affordability and excitement of Metro Ballet's spectacular stage productions. Yes  (conclusion 1).

KarishmaB · Answer

Responding to a pm:

Profits are declining and sales have been flat (number of people attending is steady)
Those who attend, like it and attend regularly. Among others - most don't know about it and some who do assume that performances are boring and the tickets too expensive. 
So company has been spending more money on spectacular stage productions, while lowering ticket prices (addressing people's 'imagined' concerns - 'imagined' because these people imagine that these issues are there. They don't really know.)

Select for column 1, the option that will help reduce costs (independent of all other options)
Select for column 2, the option that will help increase attendance (independent of all other options)

Option 1. Obtain public funding to double the spending on stage productions without increasing ticket prices  
 Doesn't reduce expenses or increase attendance. People imagine that the productions are boring. They will continue to imagine the same since they do not know about it anyway.

Option 2. Return spending on productions to levels of several years ago  
This is straightforward. If spending on production is reduced, expenses are likely to reduce. 
 Select for column 1

Option 3. Expand productions to include modern, folk, and tap dance traditions  
 Those who attend prefer    classical ballet to other forms of dance. Those who do not  attend - we don't know what they like. Then this solves no problem.

Option 4. Offer special discounts to reward people who have attended the greatest number of performances  
 We need to reduce costs, not increase. Also, discounts to those already attending will not bring in new people.

Option 5. Mount a local advertising campaign emphasizing the affordability and excitement of Metro Ballet's spectacular stage productions  
The reason why most people don't attend is that they assume that performances are boring and the tickets are too expensive. They need to be told about the  affordability and excitement of the stage productions. So this may increase attendance.

Select for column 2

Why does the question specifically say " select the strategy that,  in the absence of the other alternatives listed , would lead most directly to ..."

Because the alternatives are conflicting at times. Option 1 talks about doubling spending on production and option 2 talks about reducing spending on production. Hence the question mentions that assume any other strategy doesn't happen, then which one strategy will solve which one problem.

soumyab12 · Answer

For decreased expenses, why is option 1 wrong if the expenses are offset by public funding? It will also reduce overall expenses from their pocket as they have public funding. Also, the reason why I didn't choose option 2 for this is because nowhere does the question tell us that the spending levels from several years ago are lower than those of today. The option just says return to that level of spending but what if that was higher than today?

Bunuel · Answer

Option 1 is wrong because the prompt asks for a strategy that “would lead most directly to decreasing Metro Ballet’s expenses for its classical ballet productions.” “Double the spending” raises the expense amount. Public funding changes who pays, not how much is spent.

Option 2 is right because the passage says “over the past decade the company has spent increasing amounts of money on spectacular stage productions.” Earlier levels are therefore lower than today. Option 2 says “Return spending on productions to levels of several years ago,” which reduces expenses.

Metro Ballet Company presents high-quality productions of traditional

Prep Toolkit

Top 5 GMAT Debrief Videos

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards

Decrease expenses	Increase audience size	Statements
		Obtain public funding to double the spending on stage productions without increasing ticket prices
		Return spending on productions to levels of several years ago
		Expand productions to include modern, folk, and tap dance traditions
		Offer special discounts to reward people who have attended the greatest number of performances
		Mount a local advertising campaign emphasizing the affordability and excitement of Metro Ballet's spectacular stage productions

GMAT Two-part Analysis (TPA) Questions

Metro Ballet Company presents high-quality productions of traditional

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards