GMAT Question of the Day: Daily via email | Daily via Instagram New to GMAT Club? Watch this Video

 It is currently 21 Jan 2020, 21:23

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# New stores financed by investors have a much lower failure rate than

Author Message
TAGS:

### Hide Tags

Math Expert
Joined: 02 Sep 2009
Posts: 60555
New stores financed by investors have a much lower failure rate than  [#permalink]

### Show Tags

14 Oct 2019, 21:43
00:00

Difficulty:

15% (low)

Question Stats:

89% (01:28) correct 11% (01:31) wrong based on 89 sessions

### HideShow timer Statistics

Competition Mode Question

New stores financed by investors have a much lower failure rate than stores financed by other means. Source of financing, therefore, must be a more important causative factor in the success of a new store than are such factors as the location of the store, the quality of the staff, or the choice of merchandise.

Which of the following, if true, most seriously weakens the argument above?

A. Investors tend to be more responsive than others to changes in a new store’s financial needs.
B. The strategic planning of a new store is a less important factor in the long-term success of the business than are the personal characteristics of the owner.
C. More than half of all new stores close within three years.
D. The management of new stores is generally less formal than the management of ongoing stores.
E. Investors base their decisions to fund new stores on such factors as the personal characteristics of the owner, location of the store, and marketing goals.

_________________
Manager
Joined: 29 May 2019
Posts: 129
Re: New stores financed by investors have a much lower failure rate than  [#permalink]

### Show Tags

14 Oct 2019, 22:10
1
New stores financed by investors have a much lower failure rate than stores financed by other means. Source of financing, therefore, must be a more important causative factor in the success of a new store than are such factors as the location of the store, the quality of the staff, or the choice of merchandise.

Conclusion is source of financing is more important than other factors. We need to weaken this.

Which of the following, if true, most seriously weakens the argument above?

A. Investors tend to be more responsive than others to changes in a new store’s financial needs.
This talks about why new stores financed by investors does not fail and not about the conclusion. Eliminate

B. The strategic planning of a new store is a less important factor in the long-term success of the business than are the personal characteristics of the owner.
It is not given in the premise about long term success. Does not affect conclusion. Eliminate.

C. More than half of all new stores close within three years.
Does not have any effect on conclusion. Eliminate.

D. The management of new stores is generally less formal than the management of ongoing stores.
We are not talking about ongoing store. Irrelevant. Eliminate.

E. Investors base their decisions to fund new stores on such factors as the personal characteristics of the owner, location of the store, and marketing goals.
This makes sense as it is related to our conclusion and says investors decision is based on the factors which are mentioned not important in the conclusion. So this is weakening the conclusion which says those factors are not important.

_________________
Pick yourself up, dust yourself off, and start again.

Success is the sum of all small efforts.

MAKE IT HAPPEN
Senior Manager
Joined: 01 Mar 2019
Posts: 395
Location: India
Concentration: Strategy, Social Entrepreneurship
Schools: Ross '22, ISB '20, NUS '20
GPA: 4
Re: New stores financed by investors have a much lower failure rate than  [#permalink]

### Show Tags

14 Oct 2019, 23:14
1
Argument says that it's only depend on a single factor exclusively - I.e sources of financing

So in order to weaken the statement...We have to provide some other important factors....

Option E does the above correctly

OA:E

Posted from my mobile device
Manager
Joined: 17 Jan 2019
Posts: 146
Re: New stores financed by investors have a much lower failure rate than  [#permalink]

### Show Tags

15 Oct 2019, 00:23
1
New stores financed by investors have a much lower failure rate than stores financed by other means. Source of financing, therefore, must be a more important causative factor in the success of a new store than are such factors as the location of the store, the quality of the staff, or the choice of merchandise.

Which of the following, if true, most seriously weakens the argument above?

A. Investors tend to be more responsive than others to changes in a new store’s financial needs.— possibly but doesn’t guarantee success of the store
B. The strategic planning of a new store is a less important factor in the long-term success of the business than are the personal characteristics of the owner. — doesn’t mention the investor
C. More than half of all new stores close within three years. —out of scope
D. The management of new stores is generally less formal than the management of ongoing stores. —doesn’t tell anything
E. Investors base their decisions to fund new stores on such factors as the personal characteristics of the owner, location of the store, and marketing goals. — correct. If the investors decide which store to invest base on the characteristics of owner, location and marketing goals before investing meaning that those factors are the cause of the store success as well. If the characteristics of owners, location and marketing goals aren’t good, the investor won’t invest in the first place. Therefore, if this is true, the it would weaken the assumption.

Posted from my mobile device
Manager
Joined: 05 Aug 2018
Posts: 72
Location: Thailand
Concentration: Finance, Entrepreneurship
GPA: 3.68
WE: Business Development (Energy and Utilities)
Re: New stores financed by investors have a much lower failure rate than  [#permalink]

### Show Tags

15 Oct 2019, 00:28
1
New stores financed by investors have a much lower failure rate than stores financed by other means. Source of financing, therefore, must be a more important causative factor in the success of a new store than are such factors as the location of the store, the quality of the staff, or the choice of merchandise.

Conclusion: Source of financing is more important factor in the success of a new store than are other factors.

Weaken Argument: that source of financing is the more important factor, Pre-thinking: 1) other factors is more important 2) investors are based their investment in other factors e.g. location, quality of the staff, the conclusion will not hold true.

A. Investors tend to be more responsive than others to changes in a new store’s financial needs. - this would strengthen the argument
B. The strategic planning of a new store is a less important factor in the long-term success of the business than are the personal characteristics of the owner. - - irrelevant nothing is related to source of financing factors
C. More than half of all new stores close within three years. - irrelevant
D. The management of new stores is generally less formal than the management of ongoing stores. - irrelevant
E. Investors base their decisions to fund new stores on such factors as the personal characteristics of the owner, location of the store, and marketing goals. - Match with our pre-thinking

Therefore E is the correct answer choice.
Director
Joined: 18 May 2019
Posts: 653
Re: New stores financed by investors have a much lower failure rate than  [#permalink]

### Show Tags

15 Oct 2019, 01:01
1
The right answer must be option E in my view.

Per the argument given, Cause: Financing of new stores by Investors. Effect: Results in Lower failure Rate.

The best answer is one that reverses the cause and effect relationship or the option which states the cause stated in the argument as the effect rather than the cause.
Option E basically states that New Investors' decision to fund a store is based on factors such as characteristics of the owner, location of the store, and marketing goals. Implying the Cause is rather based on factors such as owner characteristics, location of the store, and marketing goals. The effects per option E is instead Investors' decision to fund the new store.
GMAT Club Legend
Joined: 18 Aug 2017
Posts: 5701
Location: India
Concentration: Sustainability, Marketing
GPA: 4
WE: Marketing (Energy and Utilities)
Re: New stores financed by investors have a much lower failure rate than  [#permalink]

### Show Tags

15 Oct 2019, 01:15
1
conclusion:
Source of financing, therefore, must be a more important causative factor in the success of a new store than are such factors as the location of the store, the quality of the staff, or the choice of merchandise.
option which weakens the conclusion:

Investors base their decisions to fund new stores on such factors as the personal characteristics of the owner, location of the store, and marketing goals
IMO E

New stores financed by investors have a much lower failure rate than stores financed by other means. Source of financing, therefore, must be a more important causative factor in the success of a new store than are such factors as the location of the store, the quality of the staff, or the choice of merchandise.

Which of the following, if true, most seriously weakens the argument above?

A. Investors tend to be more responsive than others to changes in a new store’s financial needs.
B. The strategic planning of a new store is a less important factor in the long-term success of the business than are the personal characteristics of the owner.
C. More than half of all new stores close within three years.
D. The management of new stores is generally less formal than the management of ongoing stores.
E. Investors base their decisions to fund new stores on such factors as the personal characteristics of the owner, location of the store, and marketing goals.
Intern
Joined: 24 Aug 2013
Posts: 11
Location: Finland
Concentration: Marketing, Finance
GPA: 3.4
WE: Account Management (Computer Software)
Re: New stores financed by investors have a much lower failure rate than  [#permalink]

### Show Tags

15 Oct 2019, 04:16
1
Summary: the conclusion is draw based on the fact that Stores with investment from Investor have lower chance of failure (Investor -> Successful). Now, let's examine the answer choices:

A. Investors tend to be more responsive than others to changes in a new store’s financial needs.-> This emphasize the importance of investors in the success of store, hence strengthen the conclusion -> OUT
B. The strategic planning of a new store is a less important factor in the long-term success of the business than are the personal characteristics of the owner.This one is out of scope because it mentions irrelevant factors to the argument->OUT
C. More than half of all new stores close within three years.Thanks, Nice to know ->OUT
D. The management of new stores is generally less formal than the management of ongoing stores.So? -> OUT
E. Investors base their decisions to fund new stores on such factors as the personal characteristics of the owner, location of the store, and marketing goals.This option explain the reason behind the success of Stores with Investor: not the investor but other factors contribute to the success of the stores
VP
Joined: 24 Nov 2016
Posts: 1086
Location: United States
Re: New stores financed by investors have a much lower failure rate than  [#permalink]

### Show Tags

15 Oct 2019, 04:52
1
Quote:
New stores financed by investors have a much lower failure rate than stores financed by other means. Source of financing, therefore, must be a more important causative factor in the success of a new store than are such factors as the location of the store, the quality of the staff, or the choice of merchandise.

Which of the following, if true, most seriously weakens the argument above?

A. Investors tend to be more responsive than others to changes in a new store’s financial needs.
B. The strategic planning of a new store is a less important factor in the long-term success of the business than are the personal characteristics of the owner.
C. More than half of all new stores close within three years.
D. The management of new stores is generally less formal than the management of ongoing stores.
E. Investors base their decisions to fund new stores on such factors as the personal characteristics of the owner, location of the store, and marketing goals.

ARGUMENT
[prem] Stores financed by investors have a lower failure rate than stores financed through other means;
[con] Therefore, source of financing must be a more important factor than other things such as location quality etc;
[asum] That investors do not base their decisions to finance on these other things.

Senior Manager
Joined: 10 Apr 2018
Posts: 309
Location: India
Concentration: General Management, Operations
GMAT 1: 680 Q48 V34
GPA: 3.3
Re: New stores financed by investors have a much lower failure rate than  [#permalink]

### Show Tags

15 Oct 2019, 05:11
1
Quote:
New stores financed by investors have a much lower failure rate than stores financed by other means. Source of financing, therefore, must be a more important causative factor in the success of a new store than are such factors as the location of the store, the quality of the staff, or the choice of merchandise.

Which of the following, if true, most seriously weakens the argument above?

A. Investors tend to be more responsive than others to changes in a new store’s financial needs.
B. The strategic planning of a new store is a less important factor in the long-term success of the business than are the personal characteristics of the owner.
C. More than half of all new stores close within three years.
D. The management of new stores is generally less formal than the management of ongoing stores.
E. Investors base their decisions to fund new stores on such factors as the personal characteristics of the owner, location of the store, and marketing goals.

A. Wrong. This option, in a small way, strengthens the conclusion.
B. Wrong. Comparison between store owner and strategic planning is not in the scope of the argument.
C. Wrong. The information in this option has no impact on the argument.
D. Wrong. Information given is irrelevant.
E. Correct. This option suggests that investors fund new stores on the basis of location of the store, and marketing goals, etc., thus weakening our belief in the conclusion.
Senior Manager
Joined: 22 Feb 2018
Posts: 446
Re: New stores financed by investors have a much lower failure rate than  [#permalink]

### Show Tags

15 Oct 2019, 08:18
1
Imo. E

Premise: New stores financed by investors have a much lower failure rate than stores financed by other means.

Conclusion: Source of financing, therefore, must be a more important causative factor in the success of a new store than are such factors as the location of the store, the quality of the staff, or the choice of merchandise.

Cause and effect: Source of financing leads success of new store rather than location of the store, the quality of the staff, or the choice of merchandise.

Potential weakener: 1) what if other mentioned factors leads to success of new store or
2) Another (new) factor leads to success of new store.

Which of the following, if true, most seriously weakens the argument above?

A. Investors tend to be more responsive than others to changes in a new store’s financial needs. - Out of scope as it's far away from conclusion.
B. The strategic planning of a new store is a less important factor in the long-term success of the business than are the personal characteristics of the owner. - Nothing about long term success of business mentioned in the paragraph.
C. More than half of all new stores close within three years. - Out of scope as it's far away from conclusion.
D. The management of new stores is generally less formal than the management of ongoing stores. - So, what? How it affects the conclusion? Wrong.
E. Investors base their decisions to fund new stores on such factors as the personal characteristics of the owner, location of the store, and marketing goals. - Yes, a few of other (mentioned) factors, i.e. personal characteristics of the owner and location of the store considered by investors prior to investing into new store. Hence, it weakens the conclusion.
Math Expert
Joined: 02 Sep 2009
Posts: 60555
Re: New stores financed by investors have a much lower failure rate than  [#permalink]

### Show Tags

15 Oct 2019, 21:05
Bunuel wrote:

Competition Mode Question

New stores financed by investors have a much lower failure rate than stores financed by other means. Source of financing, therefore, must be a more important causative factor in the success of a new store than are such factors as the location of the store, the quality of the staff, or the choice of merchandise.

Which of the following, if true, most seriously weakens the argument above?

A. Investors tend to be more responsive than others to changes in a new store’s financial needs.
B. The strategic planning of a new store is a less important factor in the long-term success of the business than are the personal characteristics of the owner.
C. More than half of all new stores close within three years.
D. The management of new stores is generally less formal than the management of ongoing stores.
E. Investors base their decisions to fund new stores on such factors as the personal characteristics of the owner, location of the store, and marketing goals.

Official Explanation

The best answer is E. The argument is that source of financing must be a more important causative factor in the success of a new store than other factors. Choice
E suggests that it is not the source of financing that makes the difference, rather that investors are more likely to finance new stores in which the other factors - good locations, good quality of staff etc. - are good.
_________________
Re: New stores financed by investors have a much lower failure rate than   [#permalink] 15 Oct 2019, 21:05
Display posts from previous: Sort by