Internal Memorandum from Toy Supply Company

Hi,
tryambaks and rachitshah,
the answer has to be B and not E..

lets look at E..
E. Toy Supply Company's customers are currently happy with the prices that Toy Supply Company charges for its products...
two reasons for it not to be correct
1)the Company has its goal to keep the customers happy but it is not given that the company has been able to meet its goal..
2) a subtle change from " large retail customers to customers in choice..

now lets see why B should be correct..
B. Toy Supply Company's goal is possible to meet only if the company can continually cut the wholesale price of their products...
what is the company's goal..
At Toy Supply Company our goal is to keep our large retail customers happy.
How can the large retail customers be kept happy...
find ways to continually deliver products on time and at ever lower wholesale prices...

so the goal is possible only if prices are brought down and are delivered in time..
so both are necesssary.. and B mentions one of them
Correct... B
Hope it helped

Hi chetan2u,

I am not convinced with this OA and reasoning behind this.
1) 'Keeping' our retail customer should indicate that the customers are presently happy. (Please correct me if I am wrong?)
2) Large retail customer are a part of a whole (customer) - so this shouldn't pose an issue.

Also,
as I mentioned about B -> It only mentions 1 of the reasons and both are necessary. (It does mention the word 'possible' - but I am not completely sure about it)

we can conclude that toy supply company can cut its prices enough, so that to keep large retail customers happy, while making profit.

Which of the following must be true on the basis of the statements in the memorandum above?

A. Toy Supply Company's competitors will succeed in winning large retail customers only if the competitors adopt the same goal that Toy Supply Company has stated.
might be true, but the argument does not talk about competitors. so out.

B. Toy Supply Company's goal is possible to meet only if the company can continually cut the wholesale price of their products.
looks good.

C. Any toy manufacturer that does not keep its customers happy is sure to go out of business.
very extreme. the fact that retail customers try to find other suppliers does not mean that they will actually find!!!

D. Most retailers are looking for new toy suppliers.
there is no information in the argument that would suggest this.

E. Toy Supply Company's customers are currently happy with the prices that Toy Supply Company charges for its products.
might be true. the argument says that the goal is to keep the customers happy. the level of satisfaction cannot be inferred from the argument.

in addition to what the above was mentioned in favor of E:

suppose we have 100 clients.
20 of them are large retailers - these one are happy as mentioned in the opening sentence.
80 of them are other customers - these one are not happy.

together, we have 80% of customers who are not satisfied.

does this make sense now?

I stand corrected. Thanks for pointing it out.

Hi rachitshah,
I'll touch on the three points mentioned by you..
1) 'Keeping' our retail customer should indicate that the customers are presently happy. (Please correct me if I am wrong?)
keeping' does not mean that the thing is already happening...
example, you see someone not taking care of his parents, what would you tell him/her..
" you should keep your parents happy, afterall they have kept you happy till now..

2) Large retail customer are a part of a whole (customer) - so this shouldn't pose an issue.
I would agree on this to some extent.....
the point above of 80% and 20% will be ok if it says "most of customers"..

3)as I mentioned about B -> It only mentions 1 of the reasons and both are necessary...
i will give you example..
the government will give the highest sports award, khel ratna, to a player who is Indian and who has represented the country for ,say, 10 years..
here both are important so khel ratna is not possible w/o any of the two...
the choice does not say that " company has continually cut prices, so the LR customers will be happy..
then it will be wrong..
you will have to understand the differences in two

Hope it helped

Hi chetan2u daagh Bunuel,

As its a must be true question, so any option which talks about new information can be eliminated.

E. Talks about Company's customers are CURRENTLY HAPPY---> therefore wrong.
It might be correct if it was written --->> Company's customers MIGHT be happy ( because in the last sentence company stated that its goal is to KEEP our large retail customers happy) ...So they will TRY to make customer happy, weather it will achieve its goal or not..Its still a question in DOUBT..
Hence, eliminated.

D. MOST retailers are looking for new toy suppliers-- How do we know..?? ELIMINATED

C. States that any toy manufacturer will go out of business...We don't know.... ELIMINATED

B. Toy Supply Company's goal is possible to meet ONLY IF the company can continually cut the wholesale price of their products

->Toy Supply Company's goal is to keep its large retail customers happy.
-> To keep its large retail customers happy we need to things.
a) Find ways to continually deliver products on time
b) Find ways to continually deliver products at ever lower wholesale prices ( AS STATED IN OPTION B )
If company's goal depends on 2 things then how could company achieve it's goal ONLY by meeting 1 task--> continually deliver products at ever lower wholesale prices

A. IMO-- A is best
Debrief-

If I am an owner of a toy company then my competitors also dealing with toys.
To have large retail customers we need to things
1) Find ways to continually deliver products on time
2) Find ways to continually deliver products at ever lower wholesale prices

My company goal is to win large retail customers.
If my competitors also want to have large retail customers---> Then they should also have same goal as of mine. ( As stated in option A)

Toy Supply Company's competitors will succeed in winning large retail customers only if the competitors adopt the same goal that Toy Supply Company has stated.

Although its the correct answer... I am not convinced

Please help....

Thanks and Regards,
Prakhar

RAHKARP27071989
Your line of reasoning is corect. This question is a bit flawed paraphrase of one from OG 11 :

When the products of several competing suppliers are perceived by consumers to be essentially the same,
classical economics predicts that price competition will reduce prices to the same minimal levels and all
suppliers’ profits to the same minimal levels. Therefore, if classical economics is true, and given suppliers’
desire to make as much profit as possible, it should be expected that .

Hi,
lets see the two choices B and A..

why B is correct..
B.Toy Supply Company's goal is possible to meet ONLY IF the company can continually cut the wholesale price of their products..
this means say, the companys goal is met, it is a must that the company has cut the wholesale prices of their products
this has to be true. ofcourse, even second point of delivary on time is correct, but we are discussing about only one
What you are confusing with is ..
If the company cuts wholesale prices, company's goal will be met...
this is not what B means
you should practice the logic of this Q because you will find this being used in different ways in different Qs..

A only if B..
it means If A, then B is must..
but does not mean If B, then A is must..
apply this on the choice

A. Toy Supply Company's competitors will succeed in winning large retail customers only if the competitors adopt the same goal that Toy Supply Company has stated..
If I am following a strategy and my competitor too follow the same strategy, there is a stalemate. How can my competitor wean away my customers.

Hope it helped

Thanks alot chetan2u..
I got your point.

Keeping our large retail customers happy requires that toy manufacturers such as our company find ways to continually deliver products on time and at ever lower wholesale prices.
What about the bold content above, isn't that a parameter to consider to be successful other than lowering prices.
I am in for Option A.
Please advise.

I am not sure how option B is right. The word continually threw me off. The passage doesn't mention that the company needs to cut down prices regularly or continually ......

Any suggestions ?

Hi.
The passage states that the goal should be to keep the price lower than ever.
So if one company decreases the price, some other company will also decrease the cost to keep their supplies high.
This indeed will force the first one to decrease its prices.
I think this is what is meant by 'continually' in the context of the argument.

Premise 1:Keeping our large retail customers happy requires that toy manufacturers such as our company find ways to continually deliver products on time and at ever lower wholesale prices.

Premise 2: Toy manufacturing companies that do not find ways to cut the prices of their products will find that large retail customers will become unhappy and look for other toy suppliers.

Conclusion: At Toy Supply Company our goal is to keep our large retail customers happy.

The answer has to be B
Toy Supply Company's goal is possible to meet only if the company can continually cut the wholesale price of their products.

It takes its inference from second premise .

two condition to make customer happy



option B


My company price per toy -- $4 (year 2000), $4 (year 2001), $4(year 2002), $4 (year 2003), $4 (year(2004)

Competitor price per toy-- $9 (year 2000), $8 (year 2001), $7(year 2002), $6 (year 2003), $5 (year 2004)

Competitor and my company, Both are delivering on time.

My company is not continuously reducing the price. it the lowest price not the contentious reduction in price.

how come option B is correct?

daagh Sir
How is B correct as it says that only by continually reducing prices the goal will be met
whereas as per stimulus goal can be met by delivering on time and by supplying at ever lower wholesale prices

Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.