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Outsourcing is the practice of obtaining from an independent supplier

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

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New post Updated on: 09 Oct 2018, 23:50
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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.


Similar Question: https://gmatclub.com/forum/outsourcing- ... 73474.html

Originally posted by eyunni on 30 Sep 2007, 18:48.
Last edited by bb on 09 Oct 2018, 23:50, edited 5 times in total.
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Re: Outsourcing is the practice of obtaining from an independent supplier  [#permalink]

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New post 01 Oct 2007, 07:43
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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 supplier  [#permalink]

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New post 30 Sep 2007, 18:56
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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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Re: Outsourcing is the practice of obtaining from an independent supplier  [#permalink]

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New post 01 Oct 2007, 08:00
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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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Re: Outsourcing is the practice of obtaining from an independent supplier  [#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
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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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Re: Outsourcing is the practice of obtaining from an independent supplier  [#permalink]

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New post 24 Dec 2012, 00:47
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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
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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Re: Outsourcing is the practice of obtaining from an independent supplier  [#permalink]

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New post 24 Dec 2012, 01:07
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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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New post 24 Dec 2012, 01:24
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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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Re: Outsourcing is the practice of obtaining from an independent supplier  [#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.
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Re: Outsourcing is the practice of obtaining from an independent supplier  [#permalink]

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New post 15 Apr 2016, 23:27
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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?
Please explain your answers.


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. 
argument is not concern about plans that Vernon does not plan to outsource. so out of scope choice it is.

B. Vernon itself acts as an independent supplier of specialized hardware items to certain manufacturers that formerly made those items themselves. 
so what stated in this choice could help as motivation to have this plan come in place. but we are looking for a choice that tells YES, this plan will be successful. this is why it is an Out of scope choice.

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.
this choice says those independent suppliers of products or services are danger to those obtaining these services. this is a weaken-er type of choice.
 
D. Vernon plans to select the independent suppliers it will use on the basis of submitted bids. 
this choice is an evaluation not strengthen. if no bidder provide service or product in lower cost than that vernon has to bear on its own then plan is failed. vice-versa, plan is successful. this is an EVALUATE choice.

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.
If certain task that eat up all valuable time, time that can help business grow and in turn help reduce the cost, then it is good to outsource those task to indep suppliers. - this is strengthen-er choice.

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

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New post 21 Mar 2017, 09:34
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.


The best approach is by Process of elimination A,B,C and D are clearly out of scope since they have no corelation with the provided argument,we are only left with option E
which describes the situation of the company in an alternate explaination.

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

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New post 15 Aug 2017, 11:40
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.

Vernon Inc has experienced a decline in profits, and plans to boost its profits by outsourcing business that independent suppliers can provide at a lower cost.

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

Quote:
(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.

How would this help in increasing profits for the company? This doesn't really help answer the question. OUT!


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

This is irrelevant. OUT!


Quote:
(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.

This is Out of Scope! OUT!


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

The plan is to outsource businesses that are not core to the company, and focus on the core to increase profitability. This doesn't help answer if the plan would succeed. OUT!


Quote:
(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.

This says that Vernon was performing non-core tasks inefficiently taking up too much time and effort => outsourcing these to independent suppliers would free up managers time to focus on the core business and that should help increase profitability in theory.

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

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New post 30 Nov 2017, 20:32
First of all..not sure why a couple of people are talking about dinosaurs on the first page. I guess when you outsource a self-sufficient Jurassic Park, the profits just come sliding in.

Secondly, again why are people arguing over this....this simple isn't an amazing question, even if it's from GMAC.

A, B, and C is out of scope because they don't discuss how OUTSOURCING benefits Vernon. They discuss other benefits or other general information in the industry related to outsourcing - things we don't really care about.

Let's take a closer look at D and E:

(D) Vernon plans to select the independent suppliers it will use on the basis of submitted bids.
=> Assumption Required: Cost of lowest bid < Current Cost of Outsourced Department/Component.
(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.
=> Assumption Required: More time spent by top managers on core business => Increase Profits (either through efficiency, decrease cost, standardization, optimization, insert ridiculous corporate jargon here....)

If either of the above is true, we get sweet sweet profits and thus strengthens the conclusion.

Which is more common-sense? Which makes more relative sense? I don't know.....to me they are the same. People might argue that (D) is weaker. Maybe, but the assumption that more time spend by top management = increase efficiency/profits is definitely starting to erode..especially in the US with the gap of shared interest widening, C-level compensation increasing.....The association is simply too far to be logically made, hence this isn't a great question.
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New post 25 Sep 2018, 18:11
Hello GMATNinja

Quote:
(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.


Are we not selecting A because it is kind of rephrasing the conclusion itself?

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New post 25 Sep 2018, 18:33
All other than e is out of scope ,look for process of elimination

A to d are somewhat no relation to context

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

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New post 09 Oct 2018, 14:04
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Pratik Chakravorty wrote:
Hello GMATNinja

Quote:
(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.


Are we not selecting A because it is kind of rephrasing the conclusion itself?

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Pratik

Vernon's conclusion: Outsourcing parts of Vernon's business (that independent suppliers can provide at a lower cost that Vernon) will boost Vernon's profits.

A lot of folks have rightly eliminated answer choices that don't address this specific conclusion.

Choice (A) is no exception. It doesn't rephrase the conclusion. Instead, it gives us an irrelevant detail about what Vernon is not going to outsource. Why do we care about the work that Vernon won't outsource? Knowing why they make that choice doesn't impact the conclusion that outsourcing parts of the business will boost profits.

That's why we eliminate (A). I hope this helps!
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Re: Outsourcing is the practice of obtaining from an independent supplier  [#permalink]

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New post 13 Oct 2018, 21:08
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GMATNinja wrote:
Pratik Chakravorty wrote:
Hello GMATNinja

Quote:
(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.


Are we not selecting A because it is kind of rephrasing the conclusion itself?

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Pratik

Vernon's conclusion: Outsourcing parts of Vernon's business (that independent suppliers can provide at a lower cost that Vernon) will boost Vernon's profits.

A lot of folks have rightly eliminated answer choices that don't address this specific conclusion.

Choice (A) is no exception. It doesn't rephrase the conclusion. Instead, it gives us an irrelevant detail about what Vernon is not going to outsource. Why do we care about the work that Vernon won't outsource? Knowing why they make that choice doesn't impact the conclusion that outsourcing parts of the business will boost profits.

That's why we eliminate (A). I hope this helps!


Indeed it helped! Now it makes sense.

Thanks a lot
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