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E
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
55%
(hard)
Question Stats:
64% (01:55) correct
36%
(02:19)
wrong
based on 9344
sessions
History
Date
Time
Result
Not Attempted Yet
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
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
02 Sep 2021, 22:37
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nikitamaheshwari
The objective is to increase profits by lowering cost of certain inputs.
If these inputs can be bought at a cheaper rate from some independent suppliers, it would decrease the cost.
If the managers are wasting a lot of time getting these inputs ready, then it makes sense that not only cost will decrease but managers will be able to focus more on core business and hence profits are likely to increase. Hence (E) works.
As for (C), whether independent suppliers expand to become competitors has nothing to do with Vernon's decision to use them. Irrespective of whether Vernon uses them or not, the independent suppliers will decide whether they want to expand to make the whole product that Vernon is supplying. All Vernon has to focus on is its own profitability and how to maximise it.
24 Dec 2012, 00:47
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Marcab
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.
