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Question 1
D
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
35%
(medium)
Question Stats:
69% (03:31) correct
31%
(03:29) wrong
based on 3625
sessions
History
Date
Time
Result
Not Attempted Yet
Question 2
A
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
5%
(low)
Question Stats:
81% (00:58) correct 19%
(01:31) wrong
based on 4115
sessions
History
Date
Time
Result
Not Attempted Yet
Question 3
B
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
75%
(hard)
Question Stats:
38% (01:14) correct 62%
(01:17) wrong
based on 4094
sessions
History
Date
Time
Result
Not Attempted Yet
Question 4
B
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
55%
(hard)
Question Stats:
57% (01:25) correct 43%
(01:36) wrong
based on 3909
sessions
History
Date
Time
Result
Not Attempted Yet
Modern manufacturers, who need reliable sources of materials and technologically advanced components to operate profitably, face an increasingly difficult choice between owning the producers of these items (a practice known as backward integration) and buying from independent producers. Manufacturers who integrate may reap short-term rewards, but they often restrict their future capacity for innovative product development.
Backward integration removes the need for some purchasing and marketing functions, centralizes overhead, and permits manufacturers to eliminate duplicated efforts in research and development. Where components are commodities (ferrous metals or petroleum, for example), backward integration almost certainly boosts profits. Nevertheless, because product innovation means adopting the most technologically advanced and cost-effective ways of making components, backward integration may entail a serious risk for a technologically active company—for example, a producer of sophisticated consumer electronics.
A company that decides to make rather than buy important parts can lock itself into an outdated technology. Independent suppliers may be unwilling to share innovations with assemblers with whom they are competing. Moreover, when an assembler sets out to master the technology of producing advanced components, the resulting demands on its resources may compromise its ability to assemble these components successfully into end products. Long-term contracts with suppliers can achieve many of the same cost benefits as backward integration without compromising a company’s ability to innovate.
However, moving away from backward integration is not a complete solution either. Developing innovative technologies requires independent suppliers of components to invest huge sums in research and development. The resulting low profit margins on the sale of components threaten the long-term financial stability of these firms. Because the ability of end-product assemblers to respond to market opportunities depends heavily on suppliers of components, assemblers are often forced to integrate by purchasing the suppliers of components just to keep their suppliers in business.
Backward integration removes the need for some purchasing and marketing functions, centralizes overhead, and permits manufacturers to eliminate duplicated efforts in research and development. Where components are commodities (ferrous metals or petroleum, for example), backward integration almost certainly boosts profits. Nevertheless, because product innovation means adopting the most technologically advanced and cost-effective ways of making components, backward integration may entail a serious risk for a technologically active company—for example, a producer of sophisticated consumer electronics.
A company that decides to make rather than buy important parts can lock itself into an outdated technology. Independent suppliers may be unwilling to share innovations with assemblers with whom they are competing. Moreover, when an assembler sets out to master the technology of producing advanced components, the resulting demands on its resources may compromise its ability to assemble these components successfully into end products. Long-term contracts with suppliers can achieve many of the same cost benefits as backward integration without compromising a company’s ability to innovate.
However, moving away from backward integration is not a complete solution either. Developing innovative technologies requires independent suppliers of components to invest huge sums in research and development. The resulting low profit margins on the sale of components threaten the long-term financial stability of these firms. Because the ability of end-product assemblers to respond to market opportunities depends heavily on suppliers of components, assemblers are often forced to integrate by purchasing the suppliers of components just to keep their suppliers in business.
1. According to the passage, which of the following relationships between profits and investments in research and development holds true for producers of technologically advanced components?
1) Modest investments are required and the profit margins on component sales are low.
2) Modest investments are required but the profit margins on component sales are quite high.
3) Despite the huge investments that are required, the profit margins on component sales are high.
4) Because huge investments are required, the profit margins on component sales are low.
5) Long-term contractual relationships with purchasers of components ensure a high ration of profits to investment costs.
1) Modest investments are required and the profit margins on component sales are low.
2) Modest investments are required but the profit margins on component sales are quite high.
3) Despite the huge investments that are required, the profit margins on component sales are high.
4) Because huge investments are required, the profit margins on component sales are low.
5) Long-term contractual relationships with purchasers of components ensure a high ration of profits to investment costs.
2. According to passage, when an assembler buys a firm that makes some important component of the end product that the assembler produces, independent suppliers of the same component may
A. withhold technological innovations from the assembler
B. experience improved profit margins of on sales of their products
C. lower their prices to protect themselves from competition
D. suffer financial difficulties and go out of business
E. stop developing new versions of the component
A. withhold technological innovations from the assembler
B. experience improved profit margins of on sales of their products
C. lower their prices to protect themselves from competition
D. suffer financial difficulties and go out of business
E. stop developing new versions of the component
3. According to the passage, all of the following are benefits associated with backward integration EXCEPT:
A. improvement in the management of overhead expenses
B. enhancement of profit margins on sales of components
C. simplification of purchasing and marketing operations
D. reliability of a source of necessary components
E. elimination of unnecessary research efforts
A. improvement in the management of overhead expenses
B. enhancement of profit margins on sales of components
C. simplification of purchasing and marketing operations
D. reliability of a source of necessary components
E. elimination of unnecessary research efforts
4. Which of the following best describes the way the last paragraph functions in the context of the passage?
A. The last in a series of arguments supporting the central argument of the passage is presented.
B. A viewpoint is presented which qualifies one presented earlier in the passage.
C. Evidence is presented in support of the argument developed in the preceding paragraph.
D. Questions arising from the earlier discussion are identified as points of departure for further study of the topic.
E. A specific example is presented to illustrate the main elements of argument presented in the earlier paragraphs.
A. The last in a series of arguments supporting the central argument of the passage is presented.
B. A viewpoint is presented which qualifies one presented earlier in the passage.
C. Evidence is presented in support of the argument developed in the preceding paragraph.
D. Questions arising from the earlier discussion are identified as points of departure for further study of the topic.
E. A specific example is presented to illustrate the main elements of argument presented in the earlier paragraphs.
15 Jun 2018, 03:57
Kudos
Bookmarks
Hi Aadhitthyaa
To qualify in this sense is to add a "but"/add some restrictions to an earlier opinion.
The most common way you see this is in an expression like "He gave an unqualified yes," meaning "he gave a 'yes' with no restrictions or hesitations." (Note that sentence does NOT mean "he does not have the qualifications to say yes but he did anyway." )
So B works well for us as the best of these answer choices. The third paragraph talks about the disadvantages of backward integration and implies that manufacturers could benefit from not doing backward integration. However, the fourth paragraph turns and says that not doing backward integration isn't a perfect solution either - that they might end up having to integrate backward just to keep their suppliers in business.
So the author is giving us the "but" or saying "well, what I said above doesn't always hold true" or "it's not just black and white". He or she is thus qualifying the previous paragraph that is quite supportive of eliminating backward integration.
Make sense?
To qualify in this sense is to add a "but"/add some restrictions to an earlier opinion.
The most common way you see this is in an expression like "He gave an unqualified yes," meaning "he gave a 'yes' with no restrictions or hesitations." (Note that sentence does NOT mean "he does not have the qualifications to say yes but he did anyway." )
So B works well for us as the best of these answer choices. The third paragraph talks about the disadvantages of backward integration and implies that manufacturers could benefit from not doing backward integration. However, the fourth paragraph turns and says that not doing backward integration isn't a perfect solution either - that they might end up having to integrate backward just to keep their suppliers in business.
So the author is giving us the "but" or saying "well, what I said above doesn't always hold true" or "it's not just black and white". He or she is thus qualifying the previous paragraph that is quite supportive of eliminating backward integration.
Make sense?
10 Jun 2018, 13:47
Kudos
Bookmarks
Hi oasis90
The problem with B is that the manufacturers are not selling components - instead, they assemble the components into some final product and sell that final product. Components are an input to the manufacturers, so they wouldn't look at selling components as a source of profit.
The problem with B is that the manufacturers are not selling components - instead, they assemble the components into some final product and sell that final product. Components are an input to the manufacturers, so they wouldn't look at selling components as a source of profit.
