PReciSioN
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."
Isn't the bolded part the same as saying that the cost to Vernon for these tasks is more (than the indep. suppliers) and so is somewhat a restatement of the premise? If they outsource these high cost tasks to other suppliers, naturally their workforce would be redirected to other tasks. I feel that this choice isn't adding anything new.
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."
Is it really okay to say that this is independent of whether Vernon chooses to outsource or not? It is quite possible that these independent suppliers are unable to expand independently, but if you outsource some aspects of your business to them, they are able to replicate the other remaining aspects and become competitors. C gets rid of that possibility.
I feel your pain on this one. (E) feels a little too obvious, right?
But here's the thing: answers are never wrong because they're too obvious. They're incorrect either because they don't address the conclusion the way we need them to, or because there's a better alternative.
So let's break the argument down. The conclusion is that by outsourcing to lower-cost suppliers, Venon can increase profits. Pretty straightforward.
(C) doesn't seem terribly relevant, does it? Imagine you're a manager at Vernon trying to decide if it makes sense to outsource some portion of the business. If someone on your team said, "Hey, there's little risk that an independent supplier will eventually compete with us," why would that move the needle for you? How would that impact whether Vernon's decision to outsource would increase profits? If you're getting stuff for a lower cost, your profits should go up now irrespective of what happens to suppliers [i]in the future, right?
Now go back to (E). The part you bolded isn't really a restatement of what's in the argument. If part X costs Vernon $100/unit to produce, but costs $75/unit to obtain from an independent supplier, that doesn't tell us anything about how management is spending its time, does it? But if instead of worrying about those annoying $100/unit parts, management can now devote its energy to improving some other aspect of the company... well, that's another nice benefit.
So it's not exactly an earth-shattering revelation, but it's another point in favor of the idea that outsourcing improves profitability. And because no other answer choice is better, we're stuck with (E).
I hope that helps!