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# Since the late 1970’s, in the face of a severe loss of market share in

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Re: Since the late 1970’s, in the face of a severe loss of market share in [#permalink]
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My shorthand notes:

Paragraph #1:
- US manufacturers have been losing market share since 70's
- To gain market share, they're trying to improve productivity through cost-cutting
- However, not working, and fact it seems counterproductive

Paragraph #2:
- Author visited 25 companies to get sense of the paradox mentioned in P1
- Finds cost-cutting approach is flawed
- 40/40/20 rule explains manufacturing. cost-cutting is only 20% of puzzle

Paragraph #3:
- Also, cost-cutting slows down innovation
- Shown in Abernathy's study
- Creative managers stay away b/c of focus on cost-cutting

Pargraph #4:
- US companies that escape cost-cuttign paradox develop fuller strategy
- This strategy uses other 80% of puzzle (manuf. structure and equip. and process tech.)
- example: focus on a niche
- Cost-cutting works only when it's just part of the strategy

1) B - taking the notes ingrained this one
2) C - just glance at the sentence. answer is clear.
3) A or E after quick glance at the paragraph summary. Glance back up at the paragraph and noticed the many dates mentioned. Let's go with E.
4) A or C seem best from notes. This is the trickiest problem thus far. Fortunately, our notes actually make this simple. The answer is C as the observation is that cost-cutting slows down innovation. The study supports that assertion.
5) B - taking the notes ingrained this one
6) B or E from reading the passage. I think E as 40/40/20 is a business principle.
7) D - totally D; very much ingrained from taking the notes
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Re: Since the late 1970’s, in the face of a severe loss of market share in [#permalink]
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1. The author of the passage is primarily concerned with

(A) summarizing a thesis
>> not summarizing as whole

(B) recommending a different approach-CORRECT
>> recommending a strategy of company that has freed itself from paradox

(C) comparing points of view
>> not 2 sides of view

(D) making a series of predictions
>>no prediction ; just observation about paradox

(E) describing a number of paradoxes
>>only 1 paradox is discussed

2. It can be inferred from the passage that the manufacturers mentioned in line 2 expected that the measures they implemented would

(A) encourage innovation
>>Not mentioned

(B) keep labor output constant
>>we dnt know whether there was change in laobour output or / amout of laobour

(C) increase their competitive advantage-CORRECT
>> improve productivity—and therefore enhance their international competitiveness—

(D) permit business upturns to be more easily predicted
>>it was result of their actions , not predictions in advance

(E) cause managers to focus on a wider set of objectives
>>that is reocmmendaiton from author

3. The primary function of the first paragraph of the passage is to

(A) outline in brief the author’s argument
>> author bried is in the last para

(B) anticipate challenges to the prescriptions that follow
>> only recommendation is mentioned in last para. In the 1st para, author introduces paradox and some backhand information of ongoing with manufacturers

(C) clarify some disputed definitions of economic terms
>>definition were not dsiputed

(D) summarize a number of long-accepted explanations
>> In the 1st para, author introduces paradox and some backhand information of ongoing with manufacturers

(E) present a historical context for the author’s observations-CORRECT
In the 1st para, author introduces paradox and some backhand information of ongoing with manufacturers

4. The author refers to Abernathy’s study (Highlighted Text) most probably in order to
prethinking: highlight the problem of cost cutting issues and use A’s study to seek support on cost cutting

(A) qualify an observation about one rule governing manufacturing
>>make more specific or show proof about an observation which was about cost cutting

(B) address possible objections to a recommendation about improving manufacturing competitiveness
>>recommendation is given in the last para.here author brings a point of some issue and use A’s study for highlighting it as support statement

(C) support an earlier assertion about one method of increasing productivity-CORRECT
>> manufacturers in the United States have been trying to improve productivity—and therefore enhance their international competitiveness—through cost-cutting programs

(D) suggest the centrality in the United States economy of a particular manufacturing industry
>> it only talks specifically abput a problem , that is no related with US economy .

(E) given an example of research that has questioned the wisdom of revising a manufacturing strategy
>>not example; but authout wants to highlight this problem

5. The author’s attitude toward the culture in most factories is best described as
>> it has created a penny-pinching(Extreme care in spending money; reluctance to spend money unnecessarily), mechanistic culture in most factories that has kept away creative managers.-sounds not good

(A) cautious
(B) critical-CORRECT
(C) disinterested (Unaffected by self-interest)
(D) respectful
(E) adulatory-nothing about flattery or obsequious manner

6. In the passage, the author includes all of the following EXCEPT

(A) personal observation
>> I recently visited 25 companies; it became clear to me that the cost-cutting approach to increasing productivity is fundamentally flawed.

(B) a business principle
>> cost-cutting approach

(C) a definition of productivity
>> productivity—the value of goods manufactured divided by the amount of labor input

(D) an example of a successful company
>> 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.

(E) an illustration of a process technology-CORRECT
>> Another 40 percent comes from major changes in equipment and process technology

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(extremely harmful)-
>> 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.

(B) shortsighted and difficult to sustain
>>not mentioned

(C) popular and easily accomplished
>> cost-cutting approach to increasing productivity is fundamentally flawed.

(D) useful but inadequate-CORRECT
>> 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.

(E) misunderstood but promising
>> cost-cutting approach to increasing productivity is fundamentally flawed.
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Re: Since the late 1970’s, in the face of a severe loss of market share in [#permalink]
Should not 7 answer to be C? based on following texts:
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.
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Re: Since the late 1970s, in the face of a severe loss of market share in [#permalink]
I think the answer C of Question 4 should be phrased like "support the previous sentence." because "earlier assertion" sounds ambiguous. It can be about cost-cutting improving productivity or hurting innovation.

In Question 7, I think the answer D is correct. But the author's choice of word "flawed" in the first sentence of the second paragraph is inappropriate. At the end of the paragraph, the author says it does produce result but it's limited. So, it's not fundamentally flawed. It's just limited.
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Re: Since the late 1970s, in the face of a severe loss of market share in [#permalink]
sea0920 wrote:
I think the answer C of Question 4 should be phrased like "support the previous sentence." because "earlier assertion" sounds ambiguous. It can be about cost-cutting improving productivity or hurting innovation.

In Question 7, I think the answer D is correct. But the author's choice of word "flawed" in the first sentence of the second paragraph is inappropriate. At the end of the paragraph, the author says it does produce result but it's limited. So, it's not fundamentally flawed. It's just limited.

Hello sea0920

Read the explanation in the posts in the links below.

https://gmatclub.com/forum/since-the-la ... l#p2531558

https://gmatclub.com/forum/since-the-la ... l#p1098039

Good luck!
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Re: Since the late 1970s, in the face of a severe loss of market share in [#permalink]
Sajjad1994 GMATNinja KarishmaB @

For question 7, I am confused between option B & D. Could you please clarify why B won't quality? My line of reasoning is as follows:

B) Short-sighted and difficult to sustain:

1) Short-sighted - "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". In other words, managers tend to prefer cost cutting methods as these are relatively short term fixes and do-not adversely impact assessment metrics. Therefore, Its a short-sighted strategy (in not making fundamental changes in the system)

2) Difficult to sustain - "The well-known tools of this approach...But the tools quickly reach the limits of what they can contribute"

Thanks
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Re: Since the late 1970s, in the face of a severe loss of market share in [#permalink]
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JOBS07 wrote:
Sajjad1994 GMATNinja KarishmaB @

For question 7, I am confused between option B & D. Could you please clarify why B won't quality? My line of reasoning is as follows:

B) Short-sighted and difficult to sustain:

Short-sighted - "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". In other words, managers tend to prefer cost cutting methods as these are relatively short term fixes and do-not adversely impact assessment metrics. Therefore, Its a short-sighted strategy (in not making fundamental changes in the system)

Difficult to sustain - "The well-known tools of this approach...But the tools quickly reach the limits of what they can contribute"

Thanks

The phrase ­"difficult to sustain" doesn't have anything to do with the RESULTS of the cost-cutting measures. Rather, "difficult to sustain" suggests that we can't keep up the cost-cutting measures for long. In other words, it becomes increasingly difficult to actually implement the cost-cutting measures. There's nothing in the passage indicating that this is the case.

"Short-sighted" implies the cost-cutting measures succeed in the short term but fail in the long term. But that's not what the author describes -- the cost-cutting measures never really succeed in the short term or long term. Yes, you could argue that focus on innovation is NOT short-sighted and that, in contrast, focusing on cost-cutting is more short-sighted, but that's a bit of a stretch...
Quote:
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.

Clearly the author believes that cost-cutting SHOULD be tried (i.e. it is useful). But the results of those tools are limited (i.e. inadequate). So (D) is a much better answer.­­
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Since the late 1970s, in the face of a severe loss of market share in [#permalink]
6.
(A) The author mentions personal observation by stating, "With this paradox in mind, I recently visited 25 companies."

(B) The passage discusses a business principle, particularly the "40, 40, 20" rule.

(C) The author defines productivity as "the value of goods manufactured divided by the amount of labor input."

(D) The passage indeed provides an example of a successful company, stating, "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."
(E) The passage does not directly include an illustration of a process technology.------ Correct Answer.­
Since the late 1970s, in the face of a severe loss of market share in [#permalink]
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