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Since the late 1970 s, in the face of a severe loss of

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Senior Manager
Joined: 31 Oct 2011
Posts: 338

Kudos [?]: 1257 [0], given: 18

Since the late 1970 s, in the face of a severe loss of [#permalink]

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20 Mar 2012, 22:01
Question 1
00:00

Question Stats:

39% (00:01) correct 61% (03:30) wrong based on 23

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Question 2
00:00

Question Stats:

35% (01:20) correct 65% (00:59) wrong based on 20

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Since the late 1970’s, in the face of a severe loss of market share in dozens of industries, manufacturers in the United States have been trying to improve productivity—and therefore enhance their international competitiveness—through cost-cutting programs. (Cost-cutting here is defined as raising labor output while holding the amount of labor constant.) However, from 1978 through 1982, productivity—the value of goods manufactured divided by the amount of labor input—did not improve; and while the results were better in the business upturn of the three years following, they ran 25 percent lower than productivity improvements during earlier, post-1945 upturns. At the same time, it became clear that the harder manufactures worked to implement cost-cutting, the more they lost their competitive edge.

With this paradox in mind, I recently visited 25 companies; it became clear to me that the cost-cutting approach to increasing productivity is fundamentally flawed. Manufacturing regularly observes a “40, 40, 20” rule. Roughly 40 percent of any manufacturing-based competitive advantage derives from long-term changes in manufacturing structure (decisions about the number, size, location, and capacity of facilities) and in approaches to materials. Another 40 percent comes from major changes in equipment and process technology. The final 20 percent rests on implementing conventional cost-cutting. This rule does not imply that cost-cutting should not be tried. The well-known tools of this approach—including simplifying jobs and retraining employees to work smarter, not harder—do produce results. But the tools quickly reach the limits of what they can contribute.

Another problem is that the cost-cutting approach hinders innovation and discourages creative people. As Abernathy’s study of automobile manufacturers has shown, an industry can easily become prisoner of its own investments in cost-cutting techniques, reducing its ability to develop new products. And managers under pressure to maximize cost-cutting will resist innovation because they know that more fundamental changes in processes or systems will wreak havoc with the results on which they are measured. Production managers have always seen their job as one of minimizing costs and maximizing output. This dimension of performance has until recently sufficed as a basis of evaluation, but it has created a penny-pinching, mechanistic culture in most factories that has kept away creative managers.

Every company I know that has freed itself from the paradox has done so, in part, by developing and implementing a manufacturing strategy. Such a strategy focuses on the manufacturing structure and on equipment and process technology. In one company a manufacturing strategy that allowed different areas of the factory to specialize in different markets replaced the conventional cost-cutting approach; within three years the company regained its competitive advantage. Together with such strategies, successful companies are also encouraging managers to focus on a wider set of objectives besides cutting costs. There is hope for manufacturing, but it clearly rests on a different way of managing.
4. The author refers to Abernathy’s study (line 36) most probably in order to
(A) qualify an observation about one rule governing manufacturing
(C) support an earlier assertion about one method of increasing productivity
(D) suggest the centrality in the United States economy of a particular manufacturing industry
(E) given an example of research that has questioned the wisdom of revising a manufacturing strategy

[Reveal] Spoiler:
C

7. The author suggests that implementing conventional cost-cutting as a way of increasing manufacturing competitiveness is a strategy that is
(A) flawed and ruinous
(B) shortsighted and difficult to sustain
(C) popular and easily accomplished
(E) misunderstood but promising

[Reveal] Spoiler:
D

[Reveal] Spoiler: Question #1 OA
[Reveal] Spoiler: Question #2 OA

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Re: PT #13 RC 17 [#permalink]

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20 Mar 2012, 22:12
OA is c,d

But I don't understand why the OAs are correct.

For Q4, I don't see "one method of increasing productivity" anywhere above Abernathy's study.
How does Abernathy's study support an earlier assertion if there is no assertion ahead of Abernathy's study?

For Q7, I don't see anything that shows or infers usefulness of cost-cutting in the passage.

Please, help me understand these two.

Kudos [?]: 1257 [0], given: 18

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Re: Since the late 1970 s, in the face of a severe loss of [#permalink]

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08 May 2015, 20:26
My answer for 7 was wrong. I chose B instead of D (d'oh!). That said, I think I chose the right part of the passage but misinterpreted it.

The inference can be drawn from the last section of the second paragraph where conventional cost cutting (the key term in the question) is discussed with my notes in bold:

"The final 20 percent rests on implementing conventional cost-cutting. This rule does not imply that cost-cutting should not be tried. The well-known tools of this approach—including simplifying jobs and retraining employees to work smarter, not harder—do produce results. (i.e. it is useful) But the tools quickly reach the limits of what they can contribute. (i.e. it is inadequate)"

My idea that conventional cost cutting is shortsighted came from the second last paragraph. Obviously the idea of that paragraph refers to cost cutting as a whole, not conventional cost cutting.

Hope that helps people

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Re: Since the late 1970 s, in the face of a severe loss of [#permalink]

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11 May 2015, 05:55
Quote:
But I don't understand why the OAs are correct.

For Q4, I don't see "one method of increasing productivity" anywhere above Abernathy's study.
How does Abernathy's study support an earlier assertion if there is no assertion ahead of Abernathy's study?

Can an expert please reply, because I am not able to figure this out. Abernathy’s study is about ability to develop new products. I can't see any "earlier assertion" (means any reference to this) in the passage, because 40 40 20 rule does not mention new products at all..

Is it confirmed that this is the right answer?

I think B is more appropriate, because according to B, address possible objections to a recommendation about improving manufacturing competitiveness.

So, recommendation about improving manufacturing competitiveness was to increase productivity, but Abernathy’s study says that an industry can easily become prisoner of its own investments in cost-cutting techniques, reducing its ability to develop new products.

So, the study is clearly objecting to the traditional cost-cutting techniques. But not sure if his study is objecting the recommendation; but B says: address possible objections to a recommendation. This might be slightly different.

Would request experts.

Quote:
For Q7, I don't see anything that shows or infers usefulness of cost-cutting in the passage.

This one is actually ok. Following portion of the passage states this:

This rule does not imply that cost-cutting should not be tried. The well-known tools of this approach—including simplifying jobs and retraining employees to work smarter, not harder—do produce results. But the tools quickly reach the limits of what they can contribute.

Kudos [?]: 13 [0], given: 3

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Re: Since the late 1970 s, in the face of a severe loss of [#permalink]

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11 May 2015, 06:09

Passage says: Another problem is that the cost-cutting approach hinders innovation and discourages creative people. As Abernathy’s study of automobile manufacturers has shown, an industry can easily become prisoner of its own investments in cost-cutting techniques, reducing its ability to develop new products.

Option C: support an earlier assertion about one method of increasing productivity.

Apparently, "earlier assertion about one method of increasing productivity" refers to the sentence in bold. However, when I read the statement in bold, I think that option C should have been: support an earlier assertion against one method of increasing productivity, and it should not be: support an earlier assertion about one method of increasing productivity.

Found this question quite tough, just when I was beginning to think that I am getting a good grip on RC.

Kudos [?]: 13 [0], given: 3

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Re: Since the late 1970 s, in the face of a severe loss of [#permalink]

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11 May 2015, 06:22
1
KUDOS
"About" can be either in support or against (or both?). For example, if I were to talk about you, I could be saying something good or something bad about you. The content of what I say doesn't matter, the fact that I am talking about you does. So I would be talking about you.

The key for these Structure-type questions is to look at the verb in the answer choices such as support, suggest, address, etc. That verb is a hint in how to look at that part of the passage in the context of the whole passage, and a way of eliminating answers, particularly when they are clearly wrong. You can't really draw any generalities from this type of question; to me, solving these questions is a case-by-case basis.

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Re: Since the late 1970 s, in the face of a severe loss of [#permalink]

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11 May 2015, 11:33
alman888 wrote:
"About" can be either in support or against (or both?). For example, if I were to talk about you, I could be saying something good or something bad about you.

Thanks alman888, I did understand it, but only in hindsight:).

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Re: Since the late 1970 s, in the face of a severe loss of [#permalink]

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12 May 2015, 05:14
4. The author refers to Abernathy’s study (line 36) most probably in order to

(A) qualify an observation about one rule governing manufacturing
(C) support an earlier assertion about one method of increasing productivity -- Another problem is that the cost-cutting approach hinders innovation and discourages creative people
(D) suggest the centrality in the United States economy of a particular manufacturing industry
(E) given an example of research that has questioned the wisdom of revising a manufacturing strategy

7. The author suggests that implementing conventional cost-cutting as a way of increasing manufacturing competitiveness is a strategy that is
(A) flawed and ruinous
(B) shortsighted and difficult to sustain
(C) popular and easily accomplished
(D) useful but inadequate -- successful companies are also encouraging managers to focus on a wider set of objectivesbesides cutting costs
(E) misunderstood but promising

Kudos [?]: 152 [0], given: 7

Re: Since the late 1970 s, in the face of a severe loss of   [#permalink] 12 May 2015, 05:14
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