The year after a company whose success depends on product innovation

Question

The year after a company whose success depends on product innovation has a profitable year, it invests more cash in its research and development department to attempt to generate innovations that can ensure future success. Therefore, companies whose success depends on product innovation should generate more innovations during the years following profitable years of business than during years following unprofitable years of business.

Which of the following, if true about a company whose success depends on product innovation during the year after a profitable year, casts the most serious doubt on the conclusion drawn above?

A. Its employees ask for higher wages than they do at other times.

B. Its management participates more in research and development and makes process alterations.

C. Its research and development team members propose more project ideas that the company does not have time to act on than usual.

D. Its management increases monetary team rewards for successful innovation.

E. Its innovations increase in quantity, but have a higher rate of failure when applied to the market.

sahuiitd · Accepted Answer

The correct option is B.

First narrow down the options. Only options which can cause doubt are B, C & E.

C can be neglected by thinking in the direction that Its COMPANY to take a call for generating more innovations and invest more. This has nothing to do what Team members proposes and what is COMPANY's capability. If COMPANY wants to go ahead, they will invest more to overcome other factors such as Time.

Now option E, some how supports or strengthens the conclusion. If COMPANY is generating profits, then there are higher possibilities that they would go for more innovations in up-coming year despite knowing that failure rates are high. They had profits last year so they will go ahead. But in loss condition, COMPANY would not bet for more innovations knowing they can incur more losses.

So, Finally B. If COMPANY is generating profits and wants more product innovations, then they will trust their R&D team and let them do the work. But if they are altering process involved in innovations that means something is missing as the COMPANY management is not expertise of this innovation field.

If like my response, Give Kudos.

Bunuel · Answer

Official Explanation Reading the question: The first sentence is a fact and the second provides an opinion. We have another pseudo-syllogistic argument, so we can parse it by term matching: https://gmatclub.com/forum/download/file.php?id=50063 The kinds of companies and the timing of the actions in question both match up well. The mismatch is in the last row, especially between the verbs "invest" and "generate." Even if it's a fact that they invest in R&D the year after a good year, does that mean that they should generate more innovations the year after a good year? Maybe not; maybe the results are not so accurately timed, and/or occur after a delay. That's our weakener. Applying the filter: our filter does not show up exactly as expected. But we're looking for yes on the investing and no on the generating, a failure to generate. Choices (A), (C), and (E) all sound negative, but don't necessarily impede the company's ability to generate the innovations. We're left with (B) and (D). (D), if anything, might help generating innovations. Choices (B) could be helpful or harmful, but it's the only one left. And if the "processes" have been "altered," they could be worse. The correct answer is (B). image020.jpg

Prasannathawait · Answer

The conclusion is that they should generate more innovations during the years following profitable years.

E. Its innovations increase in quantity, but have a higher rate of failure when applied to the market.

E is the answer because it says that there will be a higher rate of failure if they do so. Hence it would not be a good option.

rishab0507 · Answer

IMO E : 
Premise: If year is successful, invest in more innovation ; 
if year is unsuccessful, don't invest in more innovation following year.

Means something would have gone wrong some year which would have brought down success if they reply on innovation. Why management should be discouraged for innovation. It might be that all innovations are not bringing fruits and just adding to cost of R&D : Any point which can lead to increase r&D expenditure or unnecesary innovation can be our answer.

A. Its employees ask for higher wages than they do at other times.  : Out of scope: Incorrect

B. Its management participates more in research and development and makes process alterations. :  Out of scope: Incorrect

C. Its research and development team members propose more project ideas that the company does not have time to act on than usual. :  If they propose more ideas, we don't know if that ideas are good or not. If company is not acting on all but acting on some it doesn't cast doubt on conclusion that unsuccessful year they should not do.

D. Its management increases monetary team rewards for successful innovation.  : Incorrect

E. Its innovations increase in quantity, but have a higher rate of failure when applied to the market. :  Correct : If innovations are just done for sake of innovation and results are not yielded, its a waste of resource, leading to unsuccessful year, which cast doubt that they should work on quality innovation only, and not quantity.

eakabuah · Answer

The conclusion is that companies whose success depends on product innovation should generate more innovations during the years following the profitable years of business.

The correct answer choice most weakens on this conclusion.

A is not correct because employees merely asking for wages during such times does not mean that new successful innovations will not come out during the period.

B strengthens the conclusion because management's participation in R&D will rather increase the chances of coming out with successful innovations within the years.

C does not weaken the conclusion instead it strengthens it. It says that the company's R&D team come out with more ideas that the company is able to have time to act on. If the company has a sound way of serving the best ideas out of the lot, it should be fine in the circumstances.

D is also incorrect because increased monetary rewards for teams may motivate them to work harder to come out with an innovation that will be successful.

E is correct. If there are increased innovations but the rate of failure is high, then it's probably not the best time to embark on a drive to come out with an new innovation. This clearly weakens the conclusion drawn the most out of the lot.

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chrisbender · Answer

As far as I understand the argument more cash on hand should lead to more innovations. In no way is the cash required to go research and development. In this instance D seems better than B. In B, the managers seem to take a greater a greater interest in R and D and therefore it seems likely that any additional cash will be reinvested. As you said in the OA altered processes could be bad, but if the company is successful, why would we assume bad? In D there is a surefire reason that the cash on hand isn't going to R and D to develop more innovations. It seems more logical given the premise, but it is a challenging question.

simran2505 · Answer

Not able to understand why B is the answer and not E

MartyTargetTestPrep · Answer

Notice, (E) does not conflict with the conclusion.

(E) indicates that, IN SPITE OF the company's producing more innovations, as the passage says it will, the results that the company gets from its innovations may not be better.

(B) on the other hand provides a reason to doubt that the number of innovations will increase: management will start doing things that will slow things down.

ajayvikram4628 · Answer

In this question, I can well argue that the conclusion states that " the company should generate more innovations" and not that what the company actually does. A weakener will harm the conclusion and show some potential downside of it, which is what E actually does. It says producing more innovations will also increase the risk of failure on the market, weakening the suggestion that company should generate more innovations. What the company actually does has got nothing to do with what is proposed in the conclusion.

Correct me if I have missed any link here.

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Correct me if I have missed any link here.

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svasan05 · Answer

Hi Ajay

The "should" used in the conclusion is not used to indicate obligation, duty, or correctness ("Test takers  should  work hard if they want to get a good score on the GMAT"). It is used to indicate that the occurrence of the event is "probable" ("Messi  should  be fit for Barcelona's next match").

Option (E), while showing potential negative of the innovations, does not indicate any reason for the innovations  not increasing , which is what is required to break the conclusion. Hence option (E) cannot be the right answer.

Hope this helps.

shauryahanda · Answer

I have a doubt different from the ones mentioned in comments

The structure of argument goes in a way that profitable session gives them more to invest in RnD and hence if during this time employees start asking for more salary then amount to be invested on RnD gets reduced and hence it is possible they might not be able to make that much progress

So why is A wrong

svasan05 · Answer

Hi Shaurya

The premises given in the stimulus cannot be negated by the assumption (or strengthener, or weakener). The role of the assumption is to connect the premises to the conclusion, and the strengthener and/or weakener must also play the same role (though in opposing directions).

The stimulus clearly states:  "...it invests more cash in its research and development department..."

This means that more cash is definitely invested no matter the circumstances. The argument you have presented seems to negate the given premise that more cash is invested in R&D, which is not allowed. If we were to consider option (A), we must consider it as it is (that employees demand higher wages) without it affecting any of the given premises.

Hope this clarifies.

MONYA · Answer

MartyMurray 
Hi Marty
I think C weakens the conclusion because, after a profitable year, even though the company invests more cash in R&D, its team proposes more project ideas than the company has time to act on. If the company's implementation capacity remains the same as in the years following unprofitable years, the additional investment may not translate into more actual innovations. In other words, while the company has more resources and ideas after a profitable year, its limited bandwidth could prevent it from generating more innovations than it would after an unprofitable year. Therefore, increased R&D investment does not necessarily lead to increased innovation.

Can you please explain the fault in my reasoning?

MartyMurray · Answer

Here's (C):

C. Its research and development team members propose more project ideas that the company does not have time to act on than usual.

Notice that (C) does not say what you said, which is "while the company has more resources and ideas after a profitable year, its limited bandwidth could prevent it from generating more innovations than it would after an unprofitable year."

You've suggested that the company's bandwidth limits it in a way such that it cannot generate more innovations.

(C) doesn't say that. (C) indicates that there are more project ideas than the company has time to act on. That doesn't mean that the company doesn't have any ability to increase innovation through increased investment. It means only that the company's ability to act on ideas is not completely unlimited, which is only natural. After all, there are some limits on the time of any company.

So, we can see (C) as saying basically that, after a profitable year, the team members propose more ideas than usual, to a degree such that there are more that the company does not have time to act on. This increase in idea generation should lead to increased innovation, even if the company cannot act on all of them.

Takeaway:  To get Critical Reasoning questions correct we have to be careful to stick to exactly what answer choices and other statements say and be careful not to add ideas that are not truly conveyed or implied.

ilovecats1053 · Answer

For what it's worth, I do think obligation is the more natural reading here.

Your reading should be phrased as "tend to" / "are likely to" / "usually" etc.

The year after a company whose success depends on product innovation

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GMAT Critical Reasoning (CR) Questions

The year after a company whose success depends on product innovation

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