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# Soft Drinks Manufacturer: Despite attractive offers, our company has

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Retired Moderator
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Soft Drinks Manufacturer: Despite attractive offers, our company has  [#permalink]

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05 Sep 2015, 14:47
2
5
00:00

Difficulty:

25% (medium)

Question Stats:

75% (01:34) correct 25% (01:50) wrong based on 370 sessions

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Soft Drinks Manufacturer: Despite attractive offers, our company has rejected any plans to expand our market into the Czech Republic at this time. We simply have no data on how well received our products would be in the Czech Republic.
Industry Analyst: Your position is inconsistent. Last year, you expended into Bolivia, even after taste tests had definitely found that approximately 40% of the Bolivian population did not care for any of your products. Therefore, concerns about how well received your product will be cannot be motivating this position.

The industry analyst's argument is flawed because it fails to consider that:

A) the company's most popular soft drink in Bolivia might be different from the company's most popular soft drink in the Czech Republic.
B) coffee is more popular than most soft drinks in both Bolivia and in the Czech Republic
C) the Czech currency is much stronger than the Boliviano, the national currency of Bolivia.
D) the results of taste tests in a particularly country can change over the years as different beverages are sold in that country.
E) known risks can be assessed, but unknown risks cannot.

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Soft Drinks Manufacturer: Despite attractive offers, our company has  [#permalink]

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06 Sep 2015, 03:15
though i understood that it's E but can anyone explain why D is wrong ?
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Re: Soft Drinks Manufacturer: Despite attractive offers, our company has  [#permalink]

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06 Sep 2015, 10:08
grr8pe wrote:
though i understood that it's E but can anyone explain why D is wrong ?

Hello grr8pe

D is out of scope because it says about data obsolescense.
But analyst does not use old data to provide some decisions. He just says that in the past we have some situation when a lof people do not like the product but we still went to that market.

This answer D can be correct in such situation:
Analyst said that we should go to country A because data from 4 year old analysis show that we have high appreciation of our products in this country.
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Soft Drinks Manufacturer: Despite attractive offers, our company has  [#permalink]

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06 Sep 2015, 11:32
Soft Drinks Manufacturer has no data on how well received our products would be in the Czech Republic and is skeptical.

Industry Analyst: gives one example of not so good experience.

The industry analyst's argument is flawed because it fails to consider that:

A) the company's most popular soft drink in Bolivia might be different from the company's most popular soft drink in the Czech Republic.(Keep this aside.)
B) coffee is more popular than most soft drinks in both Bolivia and in the Czech Republic(This info does no help)
C) the Czech currency is much stronger than the Boliviano, the national currency of Bolivia.(Out of scope)
D) the results of taste tests in a particularly country can change over the years as different beverages are sold in that country.(This can be true but this is too wide in scope since it covers different beverages not only of manufacturer. The change can be positive or negative)

Out of A and E, I selected A as if since the drink is different the outcome is different.
Even if we think that the company has not yet expanded their market into Czech there cannot be a popular soft drink of that company. So this option negates the premise.(Is this analysis correct?)

Please explain why option E is correct?
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Soft Drinks Manufacturer: Despite attractive offers, our company has  [#permalink]

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06 Sep 2015, 14:35
1
Mechmeera wrote:
Soft Drinks Manufacturer has no data on how well received our products would be in the Czech Republic and is skeptical.

Industry Analyst: gives one example of not so good experience.

The industry analyst's argument is flawed because it fails to consider that:

A) the company's most popular soft drink in Bolivia might be different from the company's most popular soft drink in the Czech Republic.(Keep this aside.)
B) coffee is more popular than most soft drinks in both Bolivia and in the Czech Republic(This info does no help)
C) the Czech currency is much stronger than the Boliviano, the national currency of Bolivia.(Out of scope)
D) the results of taste tests in a particularly country can change over the years as different beverages are sold in that country.(This can be true but this is too wide in scope since it covers different beverages not only of manufacturer. The change can be positive or negative)

Out of A and E, I selected A as if since the drink is different the outcome is different.
Even if we think that the company has not yet expanded their market into Czech there cannot be a popular soft drink of that company. So this option negates the premise.(Is this analysis correct?)

Please explain why option E is correct?

Hello Mechmeera
Analyst says that In Bolivia company had a risk (40% of people do not care about products of this company) but still company went to this market
Conclusion: company should going to any country even if company has no data about product perception in this country.

So the main flaw that analyst made is a conclusion that entering to market with 40% of people who do not care about products of this company equal to entering to market with full absence of data.

A says that analyst wrong because "the company's most popular drink in Bolivia might be different from the company's most popular drink in Czech Republic". If this correct answer then we can infer that if company's most popular drink in any country are similar to company's most popular drink in Bolivia then company can go to the market of new country withouat any data.
This is wrong because similarity of the company's most popular drink says nothing about share of market. In Bolivia it can be 50% in Czech Republic it can be 1%.
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Re: Soft Drinks Manufacturer: Despite attractive offers, our company has  [#permalink]

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25 Oct 2015, 10:34
E for sure. My pre-thinking was that in Bolivia, the company had at least some data, but in CR, nothing. You cannot do smth without having at least some knowledge.
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Re: Soft Drinks Manufacturer: Despite attractive offers, our company has  [#permalink]

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25 Oct 2015, 11:23
1
Quote:
Physician: The hormone melatonin has shown promise as a medication for sleep disorders when taken in synthesized form. Because the long-term side effects of synthetic melatonin are unknown, however, I cannot recommend its use at this time

This is a simulation from the popular OG topic found in this link below

physician-the-hormone-melatonin-has-shown-promise-as-a-136962.html

In this also the answer is E
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Re: Soft Drinks Manufacturer: Despite attractive offers, our company has  [#permalink]

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30 Dec 2017, 04:22
E is a very common and important pattern in gmat. Many questions have such pattern that is similar to the pattern in E.
B,C,D are out of sscope for sure.
A is wrong b/c of the comparison between 2 most popular drinks in 2 countries.
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Re: Soft Drinks Manufacturer: Despite attractive offers, our company has  [#permalink]

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07 Aug 2018, 08:30

Official Explanation

In the case of Bolivia, the soft drinks manufacturer had some data, and therefore was making the moving into that country with a certain amount of data already in hand. By contrasts, in the case of the Czech Republic, they say they have "no data", and that's a very different set of circumstances. It's one thing to go into a situation knowing there are some opportunities and some challenges, but it's very different to go into a situation totally blind ---- that's certainly not how any business would want to take risks with sizeable portions of capital.

(E) is the credited answer, because it precisely captures this very issue. In Bolivia, we have data, so we know the risks. In the Czech Republic, they have no data, so the risks are unknown and therefore cannot be assessed. That explains the difference in the soft drink manufacturer's approach, and this is precisely what the industry analyst overlooks.

(A) is irrelevant: the soft drinks manufacturer has several products, so it does matter if the single most popular product in one place is the same as it is in the other.

(B) is irrelevant: coffee may be a bigger market in both countries, but this manufacturer wants to tap the soft drink market.

(C) is ambiguous: it suggests that initial costs of moving into the Czech market might be higher, because the currency there is stronger, but later on, any profits would be more substantial. Because it's ambiguous, this doesn't clearly support a choice either way.

(D) is irrelevant: tastes can change over time, but this company wants to know what will sell right now. They don't have any data about that in the Czech Republic.
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Re: Soft Drinks Manufacturer: Despite attractive offers, our company has   [#permalink] 07 Aug 2018, 08:30
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