Outsourcing is the practice of obtaining from an independent supplier

Question

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 use 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.

Similar Question https://gmatclub.com/forum/outsourcing- ... 53143.html

Show SpoilerOE

Argument Evaluation

Situation
In order to realize the highest year-end profits, a company should outsource any service or product that can be obtained from an independent supplier for less than it would cost the company to provide that service or product itself.

Reasoning
What weakens this argument? When could outsourcing a service or product result in a business disadvantage or lower profits? It is clear that the company must give independent suppliers enough information to enable them to provide the contracted products and services, but this means that the company can lose control over who has possession of such critical information. If the information becomes known to the company’s competitors and gives them a business advantage, the company’s profitability may be harmed rather than helped by outsourcing. This possibility weakens the argument.

(A) This would strengthen the argument since the pricing competition among independent suppliers
is an advantage for the company.

(B) Correct. This statement properly identifies one disadvantage of outsourcing: the company no longer controls access to its information and plans. With the increased possibility of competitors’ gaining access to its proprietary information, the company’s business is put at risk.

(C) Providing examples of the tasks typically outsourced or handled internally does not affect the argument.

(D) Expertise in a particular area is an advantage of outsourcing and thus a strength of the argument.

(E) The supplier’s hiring of members of the company’s staff to handle work no longer performed within the company is not shown to be a disadvantage.

The correct answer is B.

Show Answer

Official Answer

B

fluke · Accepted Answer

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"

1:45min

subhashghosh · Answer

+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.

Divyadisha · Answer

Argument says that outsourcing is a good practice if company can outsource the product cheaper.

In order to weaken the statement we have to look for an option that shows outsourcing is a bad option and it affects the business financially.

Looking at the choice, option B is talking about the bad effects of outsourcing on business.

abhishekdadarwal2009 · Answer

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?

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.

Why would a company outsource to another company? to beat the market competition by minimizing the cost of production and either maximizing the profits or lowering the prices.But this is done to win the competition,and what if the third party/ outsourced company also work for another company in the same market and in competition with the first comapny.There may be risk of information leakage or sharing of resources and the competitive company would get adantage .This would defeat the entire purpose of outsourcing.

Option B is the correct answer for weakener of the Argument.

Option B is the correct answer for weakener of the Argument.

gmatexam439 · Answer

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?

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.
 This is fact statement. The company will make use of the competition amongst the suppliers to get the cheapest rates. This doesn't strengthen or weaken the argument.

(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.
 Correct. If the internal information gets in the hands of competitor then its a huge loss for the company.

(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. 
 We are not worried about the tasks that are outsourced or 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. 
 We are not worried about the expertise of the managers.

(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. 
 We are not worried about what will happen when a supplier is sued.

Bounce1987 · Answer

Since this is a weaken question the objective is to identify the the conclusion, identify any gaps in logic in the argument and then work from wrong to right.

This argument concludes that 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 because a company’s chief objective is to realize the highest possible year-end profits.

But there could be many ways that could result in a loss in profit from this strategy. Option B is one of them and thus weakens the argument.

The fact that 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 can negatively affect the company's revenues and thus its profits.

TheRzS · Answer

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?

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.  - Incorrect - Out of scope

(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. -  Correct: When cause (outsourcing) occurs, effect (profit/business advantage) does not occur

(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. -  - Incorrect - Out of scope

(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. -  - Incorrect - Shell game

(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.  - Incorrect - Out of scope

Skywalker18 · Answer

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?

Type - weaken
Boil it down - 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.
- Maybe there is some adverse effect of outsourcing

(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. - Irrelevant - this only tells a way how maybe a company can negotiate the best price

(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.- Correct - If the trade secrets of the company falls into the hands of competitors then it will lose the competitive 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. - Irrelevant - Our goal is to maximize outsourcing

(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. - Irrelevant

(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.- Incorrect - this might be a cause of a little concern for the company but we are given this happens only sometimes

Answer B

Etawaz · Answer

Outsourcing is a practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally.

In addition to cost savings, companies can employ an outsourcing strategy to focus on core aspects of a business. Outsourcing noncore activities can improve efficiency, streamlining and productivity because another entity performs these smaller tasks better than the firm itself

Benefits of Outsourcing

Outsourcing can free up cash, personnel, facilities and time resources for a company.

It can result in cost savings from lower labor costs, taxes, energy costs and reductions in the cost of production.

In addition to cost savings, a company may also employ an outsourcing strategy something like on these departments in order to focus on its core business competencies. This allows the company to devote more resources to what it does well, which can improve efficiency and increase its competitiveness. Production can be streamlined and production time shortened while reducing operational costs.

Those non-core functions that are outsourced will usually go to outside organizations for whom that function is a core business competency, further benefiting the business through the improved management of those functions.

A company may also choose to outsource in order to avoid government regulations or mandates, such as environmental regulations or safety regulations and requirements.

Disadvantages

Outsourcing also has several disadvantages. Signing contracts with other companies may take time and extra effort from a firm's legal team. Security threats occur if another party has access to a company's confidential information and then the party suffers a data breach. A lack of communication between the company and the outsourced provider may occur, which could delay the completion of projects.

Business Process Outsourcing - BPO

A method of subcontracting various business-related operations to a third party. When business process outsourcing began, it applied chiefly to manufacturing entities, such as soft drink manufacturers. However, it is now applicable to the outsourcing of services.

CEdward · Answer

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?

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. X

(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.  CORRECT

(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. X

(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. X

(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. X

0NZ · Answer

I believe the option (E) should be "use" not "sue" 
 garimavyas

Bunuel · Answer

Yes, you are right. Fixed the typo. Thank you!

Outsourcing is the practice of obtaining from an independent supplier

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

GMAT Critical Reasoning (CR) Questions

Outsourcing is the practice of obtaining from an independent supplier

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