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Outsourcing is the practice of obtaining from an independent

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Outsourcing is the practice of obtaining from an independent [#permalink]

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Outsourcing is the practice of obtaining from an independent supplier a product or service that a company has previously provided for itself. Vernon, Inc, a small manufacturing company that has in recent years experienced a decline in its profits, plans to boost its profits by outsourcing those parts of its business that independent suppliers can provide at a lower cost than Vernon can itself.

Which of the following, if true, most strongly supports the prediction that Vernon's plan will achieve its goal?

A. Among the parts of its business that Vernon does not plan to outsource are some that require standards of accuracy too high for most independent suppliers to provide at a lower cost than Vernon can. 
B. Vernon itself acts as an independent supplier of specialized hardware items to certain manufacturers that formerly made those items themselves. 
C. Relatively few manufacturers that start as independent suppliers have been able to expand their business and become direct competitors of the companies they once supplied. 
D. Vernon plans to select the independent suppliers it will use on the basis of submitted bids. 
E. Attending to certain tasks that Vernon performs relatively inefficiently has taken up much of the time and effort of top managers whose time would have been better spent attending to Vernon's core business.

Please explain your answers.
[Reveal] Spoiler: OA

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Re: Outsourcing is the practice of obtaining from an independent [#permalink]

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eyunni wrote:
Outsourcing is the practice of obtaining from an independent supplier a product or service that a company has previously provided for itself. Vernon, Inc, a small manufacturing company that has in recent years experienced a decline in its profits, plans to boost its profits by outsourcing those parts of its business that independent suppliers can provide at a lower cost than Vernon can itself.

Which of the following, if true, most strongly supports the prediction that Vernon's plan will achieve its goal?

(A)Among the parts of its business that Vernon does not plan to outsource are some that require standards of accuracy too high for most independent suppliers to provide at a lower cost than Vernon can.

(B)Vernon itself acts as an independent supplier of specialized hardware items to certain manufacturers that formerly made those items themselves.

(C)Relatively few manufacturers that start as independent suppliers have been able to expand their business and become direct competitors of the companies they once supplied.

(D)Vernon plans to select the independent suppliers it will use on the basis of submitted bids.

(E)Attending to certain tasks that Vernon performs relatively inefficiently has taken up much of the time and effort of top managers whose time would have been better spent attending to Vernon's core business.

Please explain your answers.


I ll go for E. The idea here is to prove that by outsourcing Vernon would boost it profits. E tells us that by outsourcing, top managers can concentrate on core business who in turn would boost Vernon's profits (implied). No other option speaks about profitability.
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I would have agreed with (E) but the choice stops short of mentioning that those inefficient tasks are indeed the tasks which are outsourced.

How can I assume the above without the argument mentioning it?

Any comments are greatly appreciated.
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Re: Outsourcing is the practice of obtaining from an independent [#permalink]

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eyunni wrote:
I would have agreed with (E) but the choice stops short of mentioning that those inefficient tasks are indeed the tasks which are outsourced.

How can I assume the above without the argument mentioning it?

Any comments are greatly appreciated.



I think your concern is valid.

One reason why I chose E was that none of the other choices made sense.

Also consider this part of the stem -

outsourcing those parts of its business that independent suppliers can provide at a lower cost than Vernon can itself.

Now look at E

(E)Attending to certain tasks that Vernon performs relatively inefficiently has taken up much of the time and effort of top managers whose time would have been better spent attending to Vernon's core business --> Implies Vernon's TOP managers are spending time on things which an independent vendor can perform cheaply --> hence this time saved would be beneficial to the company and is in line with the outsourcing philosophy of getting work done cheaply and letting the costlier company resources (read top managers) to concentrate on core jobs.
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Outsourcing is the practice of obtaining from an independent supplier a product or service that a company has previously provided for itself. Since a company’s chief objective is to realize the highest possible year-end profits, any product or service that can be obtained from an independent supplier for less than it would cost the company to provide the product or service on its own should be outsourced.

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

(A) If a company decides to use independent suppliers for a product, it can generally exploit the vigorous competition arising among several firms that are interested in supplying that product.
(B) Successful outsourcing requires a company to provide its suppliers with information about its products and plans that can fall into the hands of its competitors and give them a business advantage.
(C) Certain tasks, such as processing a company’s payroll, are commonly outsourced, whereas others, such as handling the company’s core business, are not.
(D) For a company to provide a product or service for itself as efficiently as an independent supplier can provide it, the managers involved need to be as expert in the area of that product or service as the people in charge of that product or service at an independent supplier are.
(E) When a company decides to sue an independent supplier for a product or service, the independent supplier sometimes hires members of the company’s staff who formerly made the product or provided the service that the independent supplier now supplies.


oa after discussion , please post your timing too
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Re: Outsourcing is the practice of obtaining from an independent [#permalink]

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New post 16 May 2011, 01:23
+1 for B. If the company's competitors get the knowhow or the expertise through its suppliers, they can give the company a run for its Money through several means,e.g., by coming up with better versions of same product at cheaper rates and hence the bottomline of the company will be affected directly. This is directly in clash with the primary objective of the company to maximize its profits by outsourcing.
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garimavyas wrote:
Outsourcing is the practice of obtaining from an independent supplier a product or service that a company has previously provided for itself. Since a company’s chief objective is to realize the highest possible year-end profits, any product or service that can be obtained from an independent supplier for less than it would cost the company to provide the product or service on its own should be outsourced.
Which of the following, if true, most seriously weakens the argument?


Argument: Just because a outsourcing company provides a product or service at a cheaper rate, one should avail its services.

(A) If a company decides to use independent suppliers for a product, it can generally exploit the vigorous competition arising among several firms that are interested in supplying that product.
This strengthens the argument to a degree. Competition among providers ensures that the outsourced company would be benefited further.

(B) Successful outsourcing requires a company to provide its suppliers with information about its products and plans that can fall into the hands of its competitors and give them a business advantage.
Clearly weakens to a great degree. The outsourcing may enable company's competitors to develop replicas that outsourced company was relying on for its benefits, resulting in decreased sales and market bifurcation for the products it develops.

(C) Certain tasks, such as processing a company’s payroll, are commonly outsourced, whereas others, such as handling the company’s core business, are not.
Thanks for the information. I'll just skip.

(D) For a company to provide a product or service for itself as efficiently as an independent supplier can provide it, the managers involved need to be as expert in the area of that product or service as the people in charge of that product or service at an independent supplier are.
This statement discusses another reason as to why outsourcing is needed. Out of scope.

(E) When a company decides to sue an independent supplier for a product or service, the independent supplier sometimes hires members of the company’s staff who formerly made the product or provided the service that the independent supplier now supplies.
Possible drawback of outsourcing, agree!! But, it doesn't hurt the argument as badly as B does.

Ans: "B"

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Re: Outsourcing is the practice of obtaining from an independent [#permalink]

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New post 31 Aug 2011, 11:27
Can some one please tell why not option C? What is wrong about it? If suppliers will turn to the competitor then outsourcing is not a good idea.
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New post 31 Aug 2011, 11:58
ravisoft8400 wrote:
Can some one please tell why not option C? What is wrong about it? If suppliers will turn to the competitor then outsourcing is not a good idea.


(C)Relatively few manufacturers that start as independent suppliers have been able to expand their business and become direct competitors of the companies they once supplied.

Few reasons why:
1. If ONLY FEW manufacturers could become competitors, there is only a little chance that the vendors will start competing.
2. Company is not so much concerned with the competition as with the reduced efficiency and high cost. So far "A" supplies "B" what B wants at the cheaper rate, B is happy. What A does internally for its success and expansion is not of much concern to B. B can stop A from competing by not making its vendor, but there can be C's, D's and others. Irrelevant to the immediate objective that the Vernon Inc is concerned about.
3. Time frame to become the competitor is not mentioned. Perhaps it takes those suppliers 100 years to come to their client's level and the strategy and outsourcing mentioned in the passage may be for relatively short term.
4. The excel of the supplier may just be because of its efficient service and provision. That way, Vernon can actually expect more out of the supplier in terms of quality etc.

Although I mentioned few points here, I'd rejected C just by using point 2. Irrelevant to the Vernon's latest concern and objective.
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New post 31 Aug 2011, 21:08
fluke wrote:
ravisoft8400 wrote:
Can some one please tell why not option C? What is wrong about it? If suppliers will turn to the competitor then outsourcing is not a good idea.


(C)Relatively few manufacturers that start as independent suppliers have been able to expand their business and become direct competitors of the companies they once supplied.

Few reasons why:
1. If ONLY FEW manufacturers could become competitors, there is only a little chance that the vendors will start competing.
2. Company is not so much concerned with the competition as with the reduced efficiency and high cost. So far "A" supplies "B" what B wants at the cheaper rate, B is happy. What A does internally for its success and expansion is not of much concern to B. B can stop A from competing by not making its vendor, but there can be C's, D's and others. Irrelevant to the immediate objective that the Vernon Inc is concerned about.
3. Time frame to become the competitor is not mentioned. Perhaps it takes those suppliers 100 years to come to their client's level and the strategy and outsourcing mentioned in the passage may be for relatively short term.
4. The excel of the supplier may just be because of its efficient service and provision. That way, Vernon can actually expect more out of the supplier in terms of quality etc.

Although I mentioned few points here, I'd rejected C just by using point 2. Irrelevant to the Vernon's latest concern and objective.



Great explanation..But E is the clear winner as none of the other choices make sense with respect to the stimulus..
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New post 10 Dec 2012, 03:45
Can somebody explain why not D? I am confused between D and E. E is also a good candidate....but D?
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Outsourcing is the practice of obtaining from an independent supplier a product or service that a company has
previously provided for itself. Vernon, Inc., a small manufacturing company that has in recent years
experienced a decline in its profits, plans to boost its profits by outsourcing those parts of its business that
independent suppliers can provide at lower cost than Vernon can itself. Which of the following, if true,
most strongly supports the prediction that Vernon's plan will achieve its goal?
A. Among the parts of its business that Vernon does not plan to outsource are some that require standards of
accuracy too high for most independent suppliers to provide at lower cost than Vernon can.
B. Vernon itself acts as an independent supplier of specialized hardware items to certain manufacturers that
formerly made those items themselves.
C. Relatively few manufacturers that start as independent suppliers have been able to expand their business and
become direct competitors of the companies they once supplied.
D. Vernon plans to select the independent suppliers it will use on the basis of submitted bids.
E. Attending to certain tasks that Vernon performs relatively inefficiently has taken up much of the time and effort
of top managers whose time would have been better spent attending to Vernon's core business.

Source: IvyGMAT
OA
[Reveal] Spoiler:
E

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Marcab wrote:
Outsourcing is the practice of obtaining from an independent supplier a product or service that a company has
previously provided for itself. Vernon, Inc., a small manufacturing company that has in recent years
experienced a decline in its profits, plans to boost its profits by outsourcing those parts of its business that
independent suppliers can provide at lower cost than Vernon can itself. Which of the following, if true,
most strongly supports the prediction that Vernon's plan will achieve its goal?
A. Among the parts of its business that Vernon does not plan to outsource are some that require standards of
accuracy too high for most independent suppliers to provide at lower cost than Vernon can.
B. Vernon itself acts as an independent supplier of specialized hardware items to certain manufacturers that
formerly made those items themselves.
C. Relatively few manufacturers that start as independent suppliers have been able to expand their business and
become direct competitors of the companies they once supplied.
D. Vernon plans to select the independent suppliers it will use on the basis of submitted bids.
E. Attending to certain tasks that Vernon performs relatively inefficiently has taken up much of the time and effort
of top managers whose time would have been better spent attending to Vernon's core business.

Source: IvyGMAT
OA
[Reveal] Spoiler:
after discussions.



Vernon, Inc., intends to boost its profits by outsourcing those parts of its business that independent suppliers can offer at a lower cost.
To strengthen this claim, the right answer choice would provide a strong reason as to why this plan would bear fruits.


A. Among the parts of its business that Vernon does not plan to outsource are some that require standards of
accuracy too high for most independent suppliers to provide at lower cost than Vernon can.

The parts of its business that Vernon DOES NOT plan to outsource is not of any concern. Wrong.

B. Vernon itself acts as an independent supplier of specialized hardware items to certain manufacturers that
formerly made those items themselves.

The fact that Vernon is a supplier to other manufacturers does not support the fact that the plan to outsource will increase the profits. Wrong.

C. Relatively few manufacturers that start as independent suppliers have been able to expand their business and
become direct competitors of the companies they once supplied.

No relation to Vernon's claim. Wrong.

D. Vernon plans to select the independent suppliers it will use on the basis of submitted bids.

How the suppliers would be selected does not influence the efficiency of this plan. Wrong.

E. Attending to certain tasks that Vernon performs relatively inefficiently has taken up much of the time and effort
of top managers whose time would have been better spent attending to Vernon's core business.

"...those parts of its business that
independent suppliers can provide at lower cost than Vernon can itself."
This portion suggests that some of the independent suppliers can provide the same product/service to Vernon at a relatively
lower cost. This implies that Vernon is not performing these tasks in the most optimum or efficient way.
Answer choice E also suggests that top managers were spending a lot of time on certain tasks that were inefficient.
And if they weren't attending to these tasks, their time would have been put to better use attending to Vernon's core business.
Since most top managers would be focusing on the core business of Vernon, it would be more likely that they would help Vernon increase its profits, rather than spending their time on inefficient tasks.

So out of all the answer choices, E is the right one.

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New post 24 Dec 2012, 01:07
Can't it be taken other way.
During independent bids, it will be a natural phenomenon to select the bidder whose bid is the lowest. If this happens, then won't the bidding process will help boost the profits.
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Marcab wrote:
Can't it be taken other way.
During independent bids, it will be a natural phenomenon to select the bidder whose bid is the lowest. If this happens, then won't the bidding process will help boost the profits.


I have just one issue with D.

The stimuli says "..by outsourcing those parts of its business that independent suppliers CAN PROVIDE at lower cost than Vernon can itself"

This suggests that the independent suppliers are in a position to offer these services at a lower cost. But during the bidding process, there is no certainty that the lowest bid will ACTUALLY be lower than the cost incurred by Vernon. It may just be the lowest of all the bids, but not necessarily lower than Vernon's own cost. The bidders might quote higher prices just to boost their own profits. So it is a possibility that the bidding process might boost profits of Vernon, but there is still enough doubt in this option to not consider it.

On the other hand, the top managers are a part of Vernon. So it can be safely said that once they are given more time to concentrate on core business of Vernon, their entire focus would be on boosting the profits. I would still prefer E.
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New post 24 Dec 2012, 06:28
I have one concern regarding choice E.

Are we not making another assumption while picking this choice that these particular tasks would cost low if outsourced.

If we consider this scenario: tasks were too tough/ technical/ important and that's why took more time and effort and thus would cost more if outsourced. In this case we cannot outsource these task.
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New post 24 Dec 2012, 06:35
@VineetK.
Thats why "top managers" was mentioned. If there had been a case in which "top managers" was not mentioned then your point would have been valid.
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Ghostwriting is the practice of obtaining from an independent writer a manuscript that an author or
organization publishes under their own name. Dinosaurs, Inc., an amateur archaeological society that
has in recent years seen a decline in membership, plans to boost its popularity by hiring a ghostwriter
for its newsletter to provide the kind fresh perspective and stylistic innovation that the group is no
longer capable of providing itself.

Which of the following, if true, most strongly supports the prediction that Dinosaurs' plan will achieve its goal?

(A) Among the parts of the newsletter that Dinosaurs, Inc. does not plan to have ghostwritten are some that
require knowledge of the society itself that no non-member would be familiar with.

(B) The editor of the Dinosaurs, Inc. newsletter ghostwrites newsletter articles for other amateur archaeological
society newsletters.

(C) Few ghostwriters are both stylistically innovative and able to write accurately about specific archaeological issues.

(D) Dinosaurs, Inc. plans to select the ghostwriters it will use on the basis of writing samples from newsletters of other amateur societies.

(E) Many former members of Dinosaurs, Inc. cited the dullness of the newsletter as a reason for their choice to leave the society.

Source: GMAT Hacks - 082713

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Re: Ghostwriting is the practice of obtaining from ... [#permalink]

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New post 03 Oct 2013, 16:19
Official Explanation

Answer: E The organization believes that by spicing up its newsletter, it will boost its popularity, counteracting the recent decline in membership. The underlying assumption is that one has anything to do with the other. If members are leaving the group for some other reason - say, a scandal concerning management of funds – spicing up the newsletter is unlikely to do any good. Thus, in this strengthen question, we're looking for a choice that confirms the assumption. (E) is the only choice that does that, so it is correct.
Re: Ghostwriting is the practice of obtaining from ...   [#permalink] 03 Oct 2013, 16:19

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