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# Outsourcing is the practice of obtaining from an independent supplier

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

First, I'd caution you against using the negation test on anything other than Assumption questions. This test works for identifying necessary assumptions because if the argument fails without some element, then that element was clearly necessary for a successful argument. But we shouldn't expect the negation of a strengthen/weaken to go the opposite direction, and the answers to strengthen questions are rarely necessary assumptions.

As for the specific content of C, this doesn't do much for our argument. We don't really care how many independent suppliers go on to become competitors. We want to know whether this specific business decision will lead to increased profits. Sure, C tries to reassure us about a potential risk, but it doesn't really tell us what is likely to happen. Specifically, it doesn't address whether the independent suppliers that Vernon might work with are any more or less likely to become competitors once this plan is in place. In general, I can't assess changes in risk with mere quantities. For instance, I might be glad to know that few people are bitten by sharks. But that doesn't tell me if I am more likely to be bitten by a shark if I swim toward it rather than swim away.

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

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

PReciSioN wrote:
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.

GMATNinja KarishmaB­

­I also fall for trap choice (C). Here is my take on it:

Suppose Total Revenue for company is 100 and cost is 30 right now.

Now suppose it has 2 products one is major contributor to Revenue and other is negligible.

So if company decide to outsource certain part which contribute let us say 2% to overall revenue. Now will my profit will increase from 70, yes may be but it will be miniscule.

Now see what choice (E) says if management remove inefficency by outsourcing they will focus on core business which will be major needle mover for company revenue and cost will decline though slightly but overall profit will boost due to incraese in core revenue. I hope this helps!

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Re: Outsourcing is the practice of obtaining from an independent supplier [#permalink]
­(A) Not supportive: This highlights tasks Vernon won't outsource, which might still be high-cost activities. It doesn't address cost reduction through outsourcing.

(B) Not relevant: Vernon's experience as a supplier doesn't directly impact their ability to benefit from outsourcing specific tasks

(C) Not relevant: This talks about future success of suppliers, not the immediate cost savings Vernon might achieve.

(D) Somewhat supportive: Selecting suppliers based on bids suggests Vernon aims to find the most affordable options. However, it doesn't guarantee the lowest cost compared to their in-house production.

(E) Strongly supportive: This directly addresses the inefficiency that outsourcing aims to solve. By outsourcing tasks top managers struggle with, Vernon can potentially free up their time and effort, leading to cost savings and potentially increased focus on core business activities.
Re: Outsourcing is the practice of obtaining from an independent supplier [#permalink]
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