It is currently 18 Oct 2017, 04:34

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# Events & Promotions

###### Events & Promotions in June
Open Detailed Calendar

# The modern multinational corporation is described as having

Author Message
TAGS:

### Hide Tags

Senior Manager
Joined: 13 Mar 2012
Posts: 351

Kudos [?]: 195 [5], given: 31

Concentration: Operations, Strategy
The modern multinational corporation is described as having [#permalink]

### Show Tags

01 Apr 2012, 19:50
5
KUDOS
14
This post was
BOOKMARKED
Question 1
00:00

Question Stats:

51% (02:50) correct 49% (01:45) wrong based on 271

### HideShow timer Statistics

Question 2
00:00

Question Stats:

77% (00:34) correct 23% (00:36) wrong based on 255

### HideShow timer Statistics

Question 3
00:00

Question Stats:

77% (00:28) correct 23% (00:32) wrong based on 248

### HideShow timer Statistics

Question 4
00:00

Question Stats:

53% (00:46) correct 47% (00:43) wrong based on 254

### HideShow timer Statistics

The modern multinational corporation is described as having originated when the owner-managers of nineteenth-century British firms carrying on international trade were replaced by teams of salaried managers organized into hierarchies. Increases in the volume of transactions in such firms are commonly believed to have necessitated this structural change. Nineteenth-century inventions like the steamship and the telegraph, by facilitating coordination of managerial activities, are described as key factors. Sixteenth- and seventeenth century chartered trading companies, despite the international scope of their activities, are usually considered irrelevant to this discussion: the volume of their transactions is assumed to have been too low and the communications and transport of their day too primitive to make comparisons with modern multinationals interesting.

In reality, however, early trading companies successfully purchased and outfitted ships, built and operated offices and warehouses, manufactured trade goods for use abroad, maintained trading posts and production facilities overseas, procured goods for import, and sold those goods both at home and in other countries. The large volume of transactions associated with these activities seems to have necessitated hierarchical management structures well before the advent of modern communications and transportation. For example, in the Hudson's Bay Company, each far-flung trading outpost was managed by a salaried agent, who carried out the trade with the Native Americans, managed day-to-day operations, and oversaw the post's workers and servants. One chief agent, answerable to the Court of Directors in London through the correspondence committee, was appointed with control over all of the agents on the bay.

The early trading companies did differ strikingly from modern multinationals in many respects. They depended heavily on the national governments of their home countries and thus characteristically acted abroad to promote national interests. Their top managers were typically owners with a substantial minority share, whereas senior managers' holdings in modern multinationals are usually insignificant. They operated in a pre-industrial world, grafting a system of capitalist international trade onto a pre-modern system of artisan and peasant production. Despite these differences, however, early trading companies organized effectively in remarkably modern ways and merit further study as analogues of more modern structures.
1. The author's main point is that
(A) modern multinationals originated in the sixteenth and seventeenth centuries with the establishment of chartered trading companies
(B) the success of early chartered trading companies, like that of modern multinationals, depended primarily on their ability to carry out complex operations
(C) early chartered trading companies should be more seriously considered by scholars studying the origins of modern multinationals
(D) scholars are quite mistaken concerning the origins of modern multinationals
(E) the management structures of early chartered trading companies are fundamentally the same as those of modern multinationals

[Reveal] Spoiler:
C

2. With which of the following generalizations regarding management structures would the author of the passage most probably agree?
(A) Hierarchical management structures are the most efficient management structures possible in a modern context.
(B) Firms that routinely have a high volume of business transactions find it necessary to adopt hierarchical management structures.
(C) Hierarchical management structures cannot be successfully implemented without modern communications and transportation.
(D) Modern multinational firms with a relatively small volume of business transactions usually do not have hierarchically organized management structures.
(E) Companies that adopt hierarchical management structures usually do so in order to facilitate expansion into foreign trade.

[Reveal] Spoiler:
B

3. The passage suggests that modern multinationals differ from early chartered trading companies in that
(A) the top managers of modern multinationals own stock in their own companies rather than simply receiving a salary
(B) modern multinationals depend on a system of capitalist international trade rather than on less modern trading systems
(C) modern multinationals have operations in a number of different foreign countries rather than merely in one or two
(D) the operations of modern multinationals are highly profitable despite the more stringent environmental and safety regulations of modern governments
(E) the overseas operations of modern multinationals are not governed by the national interests of their home countries

[Reveal] Spoiler:
E

4. According to the passage, early chartered trading companies are usually described as
(A) irrelevant to a discussion of the origins of the modern multinational corporation
(B) interesting but ultimately too unusual to be good subjects for economic study
(C) analogues of nineteenth-century British trading firms
(D) rudimentary and very early forms of the modern multinational corporation
(E) important national institutions because they existed to further the political aims of the governments of their home countries

[Reveal] Spoiler:
A

Solve with timing.

P.S.: guys I was stuck with Q-4marked E (Someone pls explain why its incorrect), DOUBT: according to passage and according to author, are they different? Someone explain.
[Reveal] Spoiler: Question #1 OA
[Reveal] Spoiler: Question #2 OA
[Reveal] Spoiler: Question #3 OA
[Reveal] Spoiler: Question #4 OA

_________________

Practice Practice and practice...!!

If there's a loophole in my analysis--> suggest measures to make it airtight.

Kudos [?]: 195 [5], given: 31

Magoosh GMAT Instructor
Joined: 28 Dec 2011
Posts: 4420

Kudos [?]: 8428 [11], given: 102

Re: The modern multinational corporation is described as having [#permalink]

### Show Tags

05 Apr 2012, 13:20
11
KUDOS
Expert's post
4
This post was
BOOKMARKED
HI, there. I'm happy to help with this.

First of all, "according to the author" and "according to the passage" are essentially the same thing, as least as far as GMAT RC is concerned. I wouldn't worry about that distinction.

Prompt:
According to the passage, early chartered trading companies are usually described as

So, what does the paragraph say about these early charted trading companies?

Paragraph one = modern multinationals, and mentions only that, "Sixteenth- and seventeenth-century chartered trading companies, despite the international scope of their activities, are usually considered irrelevant to this discussion."

Paragraph two = a cogent argument about why the early charted trading companies are relevant to the discussion of modern multinationals. Folks often say they're irrelevant, but this passage argues otherwise.

Paragraph three = differences between early charted trading companies and & modern multinationals.

The main point of the passage: early chartered trading companies should be more seriously considered by scholars studying the origins of modern multinationals (this is Q1, answer C)

In every question, the main point of the passage should be kept in mind. Even details are mentioned to support a main point.

Now, the answer choices for Q4:
(A) irrelevant to a discussion of the origins of the modern multinational corporation
Yes, not only is this often argued, but in this passage, this author goes to great efforts to argue against it. The fact that he has to present such a strong argument why the early chartered trading companies are relevant is that most folks simply assume that they were irrelevant. Does that make sense? This is a very strong answer.

(B) interesting but ultimately too unusual to be good subjects for economic study
This contradicts the point of the passage --- the author says that studying the early chartered trading companies would be relevant and could be helpful in the economic study of modern multinationals. Contradicts the main point = OUT.

(C) analogues of nineteenth-century British trading firms
Weak. Yes, I suppose in some sense the 16- &17-cent chartered trading companies are analogues of the nineteenth-century British trading firms, but that's more or less irrelevant to the main point the author is making. In the study of modern multinationals, everyone looks at the nineteenth-century British trading firms and no one looks at the early chartered trading companies, and this author is saying: Wait! Look at the early chartered trading companies too. The point is not really about making sense of the nineteenth-century British trading firms --- it's about making sense of our modern multinationals. Irrelevant to main point = OUT

(D) rudimentary and very early forms of the modern multinational corporation
This contradicts the point of the passage ---- usually, when folks talk about where modern multinationals began, they look to the 19th cent, not to the early chartered trading companies. The early chartered trading companies get completely overlooked in the discussion of where the modern multinational corporation began. This author is trying to change that, but he is arguing against the irrelevance to which others have consigned the early chartered trading companies. Contradicts the main point = OUT

(E) important national institutions because they existed to further the political aims of the governments of their home countries

(A) is a strong answer, and the other four are, for one reason or another, unacceptable. Therefore, (A) must be the correct answer.

Do not underestimate the importance of the main point of any passage. There will always be a question asking about the main point, but all other questions will, in one way or another, harken back to the themes of the main point.

Does all this make sense?

Here's another RC question, for further practice.
https://gmat.magoosh.com/questions/767
When you submit your answer, the next page will have a complete video explanation of the question. Each of Magoosh's 800+ GMAT questions has its own video solution. Magoosh also has 200 lesson videos, including a whole series on GMAT RC. I suggest that Magoosh could offer you invaluable assistance in your GMAT preparation.

Let me know if you have any further questions.

Mike
_________________

Mike McGarry
Magoosh Test Prep

Kudos [?]: 8428 [11], given: 102

Magoosh GMAT Instructor
Joined: 28 Dec 2011
Posts: 4420

Kudos [?]: 8428 [5], given: 102

Re: The modern multinational corporation is described as having [#permalink]

### Show Tags

24 Apr 2012, 16:25
5
KUDOS
Expert's post
Hi Mike, I don't understand how we arrived at C in 1. where did we come to "and scholars should...." . Thanks.

Question #1 is a "main idea" question, the kind of question that the GMAT is guaranteed to ask about each RC passage.

1. The author's main point is that...

To attack this, first we look at the paragraphs

Paragraph one = discuss modern multinationals & their history, and mentions only that, "Sixteenth- and seventeenth-century chartered trading companies, despite the international scope of their activities, are usually considered irrelevant to this discussion."

Paragraph two = a cogent argument about why the early charted trading companies are relevant to the discussion of modern multinationals. Folks often say they're irrelevant, but this passage argues otherwise.

Paragraph three = differences between early charted trading companies and & modern multinationals.

So, in my own words, the main idea is: folks who study the history of multinationals tend to ignore the sixteenth- and seventeenth-century chartered trading companies, but they are more relevant to that history than folks realize.

Now, let's look at the whole question:

1. The author's main point is that
(A) modern multinationals originated in the sixteenth and seventeenth centuries with the establishment of chartered trading companies

A bit too strong. The author is saying --- when folks study the origin of modern multinationals, the chartered trading companies have some relevance as precursors, but this statement is saying that, essentially, the chartered trading companies and the modern multinationals are the same thing. The author argues against that in paragraph 3. This is OUT.

(B) the success of early chartered trading companies, like that of modern multinationals, depended primarily on their ability to carry out complex operations
The passage didn't really talk about the success of chartered trading companies, or what contributed or didn't contribute to their success. This is OUT.

(C) early chartered trading companies should be more seriously considered by scholars studying the origins of modern multinationals
This is quite balanced, and very close to the summary I made above. The mention of "scholars" should not be surprising. The passage is about folks studying the origins of modern multinationals --- well, exactly who would that be? My aunt Hilda? Most ordinary folks are just not going to be interested in an obscure niche of history like this. If I person actively studies it, reading book after book about the topic, then it's likely that person is a professor or graduate student --- in other words, a scholar. Scholars are the folks who study the obscure topics that most folks don't find engaging or accessible. --- this is a strong candidate for the correct answer.

(D) scholars are quite mistaken concerning the origins of modern multinationals
In GMAT RC, a term like "quite mistaken" is as strong as somebody using the F-word for emphasis in casual speech. This is about as extremist as anything you see on GMAT RC. To say scholars are "quite mistaken" is to say: they don't have a clue, they have absolutely no idea about the origins of modern multinationals. That's way to strong for what is being argued here. Here, the author says --- scholars studying the the origins of modern multinationals usually start with the period when "when the owner-managers of nineteenth-century British firms carrying on international trade were replaced by teams of salaried managers organized into hierarchies." That's a perfectly sensible and appropriate thing to study, but the author is saying --- they would understand a little bit better if they also paid some attention to the early chartered trading companies. That not at all the same as saying they are "quite mistaken." This is OUT.

(E) the management structures of early chartered trading companies are fundamentally the same as those of modern multinationals
Directly contradicted by the passage. "[The early trading companies's] top managers were typically owners with a substantial minority share, whereas senior managers' holdings in modern multinationals are usually insignificant." This is OUT.

A & B & D & E are all deeply flawed, and C is a strong choice, so C is the answer.

Again, if the passage is about an academic topic, as many many RC passages are, then don't be the least bit surprised if the word "scholar" or "professor" or similar words don't appear in the passage but do appear in the answer choices.

Does that make sense? Let me know if you have any questions.

Mike
_________________

Mike McGarry
Magoosh Test Prep

Kudos [?]: 8428 [5], given: 102

Magoosh GMAT Instructor
Joined: 28 Dec 2011
Posts: 4420

Kudos [?]: 8428 [4], given: 102

Re: The modern multinational corporation is described as having [#permalink]

### Show Tags

24 Oct 2012, 14:08
4
KUDOS
Expert's post
voodoochild wrote:
Mike,
I am sorry to open this old thread. Here's the question I got:
3. It can be inferred from the passage that the author would characterize the activities engaged in by early chartered trading companies as being
(A) complex enough in scope to requrie a substantial amount of planning and coordination on the part of management
(B) too simple to be considered similar to those of a modern multinational corporation
(C) as intricate as those carried out by the largest multinational corporations today
(D) often unprofitable due to slow communications and unreliable means of transportation
(E) hampered by the political demands imposed on them by the governments of their home countries

Can you please explain why is C incorrect? I kept bouncing between A and C. OA is A.

About A - I thought that the author doesn't say that the early trading companies were 'complex' -- she says that the company indeed have a high volume of transaction. I thought that that was a scope creep. secondly, "substantial amount of planning etc" -- is a bit far from what author says. She just talks about salaried agent, who carried out trade with NAmericans and a lawyer (I didn't understand that exact title) ..Hence, I was a bit suspicious.

The passage said: "In reality, however, early trading companies successfully purchased and outfitted ships, built and operated offices and warehouses, manufactured trade goods for use abroad, maintained trading posts and production facilities overseas, procured goods for import, and sold those goods both at home and in other countries. The large volume of transactions associated with these activities seems to have necessitated hierarchical management structures ..." The author may not use the word "complex", but look at this first sentence quoted here ---- that's complexity! THE GMAT ruthless punishes literalistic thinking on the RC --- it often uses one word or term in the passage, and then uses a different word or term meaning the same thing in the question ----- here, the passage describes a situation, and the question uses a descriptive word that could characterize that situation ---- if you look for the literal word, you won't find it. You always need to be working at the level of ideas, not just words. The second sentence quoted says quite clearly that, because of this complex level of detail, those early trading companies needed "management." This is solid evidence for (A).

voodoochild wrote:
Now C - I liked this answer choice because author says "..merit further study as analogues of modern structure" -- However, after re-reading I noticed that C has "the largest" MNC. I checked the passage, and nowhere the author talks about 'the largest' MNCs.

First of all, this is a wildly illogical statement. I would argue that --- even ignoring anything the passage says, we can reject this one because it is simply so over-the-top unreasonable. The "largest multinational corporations today" ---- take Coke --- think of the bewildering array of different places in which you can (a) buy Coke, or (b) see an ad for Coke. Then they have keep track of website visitors, folks clicking on ads, folks sending in codes under the bottle caps, prize, promotions, affiliations with other business, etc. etc. Truly mind-boggling complexity! No single person could possibly keep track of everything the company Coke does. It's off the charts. Nothing in the sixteenth century could come anything vaguely close to this! Sixteenth century folks could not even imagine that kind of complexity. Thus, this statement is totally illogical. You have to check for that sort of thing. I would say this choice was designed so that, if you think about what it's saying, it's so unreasonable that there's no way the passage could possibly support it. It's designed to trap people who scour for words without thinking deeply about meaning.

The passage says that "nineteenth-century inventions like the steamship and the telegraph, by facilitating coordination of managerial activities" increased the volume, and therefore necessarily the complexity, and this increase caused a structural change in the nineteenth century, so the companies in the 19th century were more complex than what came before. I take it as self-evident that (a) a few centuries before that, when they had no modern communication or transport at all, the entire operation and life in general was necessarily less complex, and that (b) life today is way way more complex than it was in the middle of the 19th century.

The sixteenth century trading companies "merit further study as analogues of more modern structures' means only that some features will be analogous. Saying there's an analogy between two things is not saying that two things are equivalent, or even largely similar. The whole point of that paragraph is to talk about differences between early trading companies and modern multinationals, so this sentence is simply a moderating, qualifying sentence in that context. Saying there's an analogy is way that the author can argue that, despite differences, this study is somewhat relevant in a historical sense. Despite obvious differences, there are some analogies to be made. If ANYTHING is different about life in the sixteen century and life now, it is the level of complexity. Whatever else may be similar or analogous, the sheer level of complexity will be different by several orders of magnitude.

The fact that you found (C) attractive suggests to me that you are missing the forest for the trees. You are so concentrated on finding word & quotes in the passage with the right words that you are not thinking, holistically, about what the statement is saying, and what that would really mean. Again, the RC will punish you for being too literalistic, too focused at the level of individual words, and not thinking about logic & argumentative flow & meaning & context. All that right brain stuff is hugely important on the RC. If you play GMAT RC as if it is mathematics, you will lose.

Does all this make sense?

Mike
_________________

Mike McGarry
Magoosh Test Prep

Kudos [?]: 8428 [4], given: 102

Magoosh GMAT Instructor
Joined: 28 Dec 2011
Posts: 4420

Kudos [?]: 8428 [4], given: 102

Re: The modern multinational corporation is described as having [#permalink]

### Show Tags

10 Sep 2013, 13:51
4
KUDOS
Expert's post
gmacforjyoab wrote:
mikemcgarry wrote:
Prompt:
According to the passage, early chartered trading companies are usually described as

I got thrown off between A and C . I couldnt figure out if the question was referring to what the author has described "early chartered trading companies" as or what other it was usually thought off about those companies , to which the author is refuting . How do I figure differentiate this in this particular question ?

Sometimes in a GMAT RC, an author will say: issue X traditionally has been analyzed this way, but I recommend advocating it that way. In other word, the author pits himself as the new expert against a long line a previous experts. That's exactly this particular author's situation. Therefore, the "usually" refers to the majority that came before the current author, not to the current author.
Does this make sense?
Mike
_________________

Mike McGarry
Magoosh Test Prep

Kudos [?]: 8428 [4], given: 102

Magoosh GMAT Instructor
Joined: 28 Dec 2011
Posts: 4420

Kudos [?]: 8428 [2], given: 102

Re: The modern multinational corporation is described as having [#permalink]

### Show Tags

27 Nov 2012, 12:05
2
KUDOS
Expert's post
nmehta3 wrote:
I dont understand why D is not the answer for Question 4.
I would argue that Option A is a strict paraphrase of the paragraph and goes against what the author is trying to argue. The author states that while 19th century companies are considered as an early form of the modern multinational, early industries were in fact the real source and that they were already organized under a hierarchy and had complex enough operations to warrant such hierarchies. They also indulged in volumes of trade higher than those previously believed. Ergo, 16-17th century industries predated the modern multinational and were early and rudimentary forms of it.

Dear nmehta3

I'm happy to help with this. Here's the question, with some key words highlighted.
4. According to the passage, early chartered trading companies are usually described as
(A) irrelevant to a discussion of the origins of the modern multinational corporation
(B) interesting but ultimately too unusual to be good subjects for economic study
(C) analogues of nineteenth-century British trading firms
(D) rudimentary and very early forms of the modern multinational corporation
(E) important national institutions because they existed to further the political aims of the governments of their home countries

That phrase "usually described" means --- how most authors discussing the topic have treated the early chartered trading companies, but not necessarily how this author does. In particular, if this author is making an original claim, what he says will not be the same as what most previous authors have said. This author is clearly arguing for a point of view that, apparently, has not been considered before, or at least is not the prevailing view, and so the perspective of this author is in direct opposition to what previous authors have "usually described."

We even have the proof-text: "Sixteenth- and seventeenth-century chartered trading companies, despite the international scope of their activities, are usually considered irrelevant to this discussion." You're right --- this is against what the author argued. That's the point! The questions is asking about what most authors have said --- most authors, NOT including the current author.

The author of this passage is clearly arguing for (D), and if the question were something along the lines of "summarize the author's viewpoint", then (D) would be a viable answer. Instead, we are getting just the opposite --- what do most authors, and not the current author, think? That would be (A).

In any passage in which the current author is arguing against something previously held, you have to distinguish the former view from the current view, and for any question that alludes to the former view (e.g. how something is "usually described"), then you have to take that as representative of the former view, which is in clear opposition to the current author's view.

Does all this make sense?

Mike
_________________

Mike McGarry
Magoosh Test Prep

Kudos [?]: 8428 [2], given: 102

Magoosh GMAT Instructor
Joined: 28 Dec 2011
Posts: 4420

Kudos [?]: 8428 [1], given: 102

Re: The modern multinational corporation is described as having [#permalink]

### Show Tags

01 Oct 2012, 10:19
1
KUDOS
Expert's post
moind wrote:
mikemcgarry wrote:
harshavmrg wrote:
i had the answer of CDAE..clearly wrong and got confused at many places...

harshavmrg: Do you have any specific questions you would like to ask? I am happy to help if you'd like something explained.
Mike

Hey Mike
Can you please help understand the answer to question 3, i feel the answer should not be E because nowhere in the passage is it explicitly mentioned about the national interests not governing the modern multinationals. It should be B according to me, thanks
Looking forward to your response, thanks

I'm happy to help.

Because we are weighing B vs. E, I will simply discuss those two.

3. The passage suggests that modern multinationals differ from early chartered trading companies in that
(A) the top managers of modern multinationals own stock in their own companies rather than simply receiving a salary
(B) modern multinationals depend on a system of capitalist international trade rather than on less modern trading systems
(C) modern multinationals have operations in a number of different foreign countries rather than merely in one or two
(D) the operations of modern multinationals are highly profitable despite the more stringent environmental and safety regulations of modern governments
(E) the overseas operations of modern multinationals are not governed by the national interests of their home countries

This question focuses on differences between modern multinationals vs. early chartered trading companies, and that is discussed explicitly in paragraph three of the passage. Here is paragraph three:
The early trading companies did differ strikingly from modern multinationals in many respects. They depended heavily on the national governments of their home countries and thus characteristically acted abroad to promote national interests. Their top managers were typically owners with a substantial minority share, whereas senior managers' holdings in modern multinationals are usually insignificant. They operated in a preindustrial world, grafting a system of capitalist international trade onto a premodern system of artisan and peasant production. Despite these differences, however, early trading companies organized effectively in remarkably modern ways and merit further study as analogues of more modern structures.

(B) modern multinationals depend on a system of capitalist international trade rather than on less modern trading systems
Clearly, the modern multinational are as capitalistic as an entity can be. The early chartered trading companies "[grafted] a system of capitalist international trade onto a premodern system of artisan and peasant production." Here, they are using the metaphor of the graft of a plant --- when you cut the branch of one species of plant, and attach the branch of another species so that it grows. Here, they are saying that the local systems, for example Native Americans in North American, were using less modern systems, i.e. artisan and peasant production, but the chartered trading companies themselves were using capitalism --- they were, as it were, attaching their own capitalist "stem" onto the "branch" of the less modern system. The early chartered trading companies were dealing with folks who used modern trading systems, but the trading companies themselves were thoroughly capitalist, just as much as the modern multinationals. Choice (B) is not correct.

(E) the overseas operations of modern multinationals are not governed by the national interests of their home countries
The third paragraph say explicitly: "[The early chartered trading companies] depended heavily on the national governments of their home countries and thus characteristically acted abroad to promote national interests." It cites this as the first and therefore the most significant difference in this comparison. In other words, an early Dutch trading company, in the course of doing whatever money-making things it was doing, would try to promote the interest of Holland. By contrast, modern multinational don't necessarily do anything to promote the national interests of their home countries. In fact, modern multinational may not give two hoots for the vital interests of their own home country. This interest, the national interests of their home country, was a governing priority for the early chartered trading companies but not for modern multinationals. Thus, choice (E) is correct.

Does all that make sense?

Mike
_________________

Mike McGarry
Magoosh Test Prep

Kudos [?]: 8428 [1], given: 102

BSchool Forum Moderator
Status: Aiming MBA
Joined: 18 Jul 2015
Posts: 2498

Kudos [?]: 788 [1], given: 64

Location: India
Concentration: Healthcare, Technology
GMAT 1: 710 Q50 V35
GPA: 3.65
WE: Information Technology (Health Care)
Re: The modern multinational corporation is described as having [#permalink]

### Show Tags

20 May 2017, 06:22
1
KUDOS
Kritesh wrote:
Hi ,

I just wanted to know the reason for selecting option E for the 3rd Question. I had to make a decision between C and E and chose C.

Could you help me out with this ??

Hi,

If you look at paragraph 3, we are given the following:

"The early trading companies did differ strikingly from modern multinationals in many respects. They depended heavily on the national governments of their home countries and thus characteristically acted abroad to promote national interests.".

It means 1st difference between early and modern one is early rely heavily on national govts. of their home country. I can also say that modern doesn't rely on/too heavily rely on national govts. of their home country.

This is what option E is saying. "(E) the overseas operations of modern multinationals are not governed by the national interests of their home countries".

Now, let's talk about option C. "(C) modern multinationals have operations in a number of different foreign countries rather than merely in one or two"

It says modern have operations on more than two countries . This is no where given in the passage. Hence, this point is irrelevant and OFS.
_________________

V21 ---> V40!

Kudos [?]: 788 [1], given: 64

Senior Manager
Joined: 13 Mar 2012
Posts: 351

Kudos [?]: 195 [0], given: 31

Concentration: Operations, Strategy
Re: The modern multinational corporation is described as having [#permalink]

### Show Tags

05 Apr 2012, 23:02
That's nice elaboration +1 to you.

I have seen GMAT questions mentions clearly if we are gonna answer using author's view or any other third party view discussed in the passage. But this question somewhat looked odd to me by talking so generic.
_________________

Practice Practice and practice...!!

If there's a loophole in my analysis--> suggest measures to make it airtight.

Kudos [?]: 195 [0], given: 31

Manager
Joined: 08 Jun 2011
Posts: 90

Kudos [?]: 58 [0], given: 65

Re: The modern multinational corporation is described as having [#permalink]

### Show Tags

24 Apr 2012, 04:49
mikemcgarry wrote:
HI, there. I'm happy to help with this.

First of all, "according to the author" and "according to the passage" are essentially the same thing, as least as far as GMAT RC is concerned. I wouldn't worry about that distinction.

Prompt:
According to the passage, early chartered trading companies are usually described as

So, what does the paragraph say about these early charted trading companies?

Paragraph one = modern multinationals, and mentions only that, "Sixteenth- and seventeenth-century chartered trading companies, despite the international scope of their activities, are usually considered irrelevant to this discussion."

Paragraph two = a cogent argument about why the early charted trading companies are relevant to the discussion of modern multinationals. Folks often say they're irrelevant, but this passage argues otherwise.

Paragraph three = differences between early charted trading companies and & modern multinationals.

The main point of the passage: early chartered trading companies should be more seriously considered by scholars studying the origins of modern multinationals (this is Q1, answer C)

In every question, the main point of the passage should be kept in mind. Even details are mentioned to support a main point.

Now, the answer choices for Q4:
(A) irrelevant to a discussion of the origins of the modern multinational corporation
Yes, not only is this often argued, but in this passage, this author goes to great efforts to argue against it. The fact that he has to present such a strong argument why the early chartered trading companies are relevant is that most folks simply assume that they were irrelevant. Does that make sense? This is a very strong answer.

(B) interesting but ultimately too unusual to be good subjects for economic study
This contradicts the point of the passage --- the author says that studying the early chartered trading companies would be relevant and could be helpful in the economic study of modern multinationals. Contradicts the main point = OUT.

(C) analogues of nineteenth-century British trading firms
Weak. Yes, I suppose in some sense the 16- &17-cent chartered trading companies are analogues of the nineteenth-century British trading firms, but that's more or less irrelevant to the main point the author is making. In the study of modern multinationals, everyone looks at the nineteenth-century British trading firms and no one looks at the early chartered trading companies, and this author is saying: Wait! Look at the early chartered trading companies too. The point is not really about making sense of the nineteenth-century British trading firms --- it's about making sense of our modern multinationals. Irrelevant to main point = OUT

(D) rudimentary and very early forms of the modern multinational corporation
This contradicts the point of the passage ---- usually, when folks talk about where modern multinationals began, they look to the 19th cent, not to the early chartered trading companies. The early chartered trading companies get completely overlooked in the discussion of where the modern multinational corporation began. This author is trying to change that, but he is arguing against the irrelevance to which others have consigned the early chartered trading companies. Contradicts the main point = OUT

(E) important national institutions because they existed to further the political aims of the governments of their home countries

(A) is a strong answer, and the other four are, for one reason or another, unacceptable. Therefore, (A) must be the correct answer.

Do not underestimate the importance of the main point of any passage. There will always be a question asking about the main point, but all other questions will, in one way or another, harken back to the themes of the main point.

Does all this make sense?

Here's another RC question, for further practice.
https://gmat.magoosh.com/questions/767
When you submit your answer, the next page will have a complete video explanation of the question. Each of Magoosh's 800+ GMAT questions has its own video solution. Magoosh also has 200 lesson videos, including a whole series on GMAT RC. I suggest that Magoosh could offer you invaluable assistance in your GMAT preparation.

Let me know if you have any further questions.

Mike

Hi Mike, I don't understand how we arrived at C in 1. where did we come to " and scholars should...." .

Thanks.

Kudos [?]: 58 [0], given: 65

Intern
Joined: 30 Jun 2011
Posts: 4

Kudos [?]: [0], given: 2

Re: The modern multinational corporation is described as having [#permalink]

### Show Tags

27 Sep 2012, 06:27
mikemcgarry wrote:
harshavmrg wrote:
i had the answer of CDAE..clearly wrong and got confused at many places...

harshavmrg: Do you have any specific questions you would like to ask? I am happy to help if you'd like something explained.

Mike

Hey Mike

Can you please help understand the answer to question 3, i feel the answer should not be E because no where in the passage is it explicitly mentioned about the national interests not governing the modern multinationals

It should be B according to me, thanks

Looking forward to your response, thanks

Kudos [?]: [0], given: 2

Manager
Joined: 16 Feb 2011
Posts: 195

Kudos [?]: 237 [0], given: 78

Schools: ABCD
Re: The modern multinational corporation is described as having [#permalink]

### Show Tags

24 Oct 2012, 09:47
Mike,
I am sorry to open this old thread. Here's the question I got:
3. It can be inferred from the passage that the author would characterize the activities engaged in by early chartered trading companies as being
(A) complex enough in scope to requrie a substantial amount of planning and coordination on the part of management
(B) too simple to be considered similar to those of a modern multinational corporation
(C) as intricate as those carried out by the largest multinational corporations today
(D) often unprofitable due to slow communications and unreliable means of transportation
(E) hampered by the political demands imposed on them by the governments of their home countries

Can you please explain why is C incorrect? I kept bouncing between A and C. OA is A.

About A - I thought that the author doesn't say that the early trading companies were 'complex' -- she says that the company indeed have a high volume of transaction. I thought that that was a scope creep. secondly, "substantial amount of planning etc" -- is a bit far from what author says. She just talks about salaried agent, who carried out trade with NAmericans and a lawyer (I didn't understand that exact title) ..Hence, I was a bit suspicious.

Now C - I liked this answer choice because author says "..merit further study as analogues of modern structure" -- However, after re-reading I noticed that C has "the largest" MNC. I checked the passage, and nowhere the author talks about 'the largest' MNCs.

Now, I have an equal number of positive points and negative points for A and C. GMAC likes A. Can you please comment on the negatives pointed out by me for A and C?

Thanks

Kudos [?]: 237 [0], given: 78

Current Student
Joined: 05 May 2011
Posts: 70

Kudos [?]: 28 [0], given: 8

Re: The modern multinational corporation is described as having [#permalink]

### Show Tags

27 Nov 2012, 09:28
I dont understand why D is not the answer for Question 4.

I would argue that Option A is a strict paraphrase of the paragraph and goes against what the author is trying to argue. The author states that while 19th century companies are considered as an early form of the modern multinational, early industries were in fact the real source and that they were already organized under a hierarchy and had complex enough operations to warrant such hierarchies. They also indulged in volumes of trade higher than those previously believed. Ergo, 16-17th century industries predated the modern multinational and were early and rudimentary forms of it.

Kudos [?]: 28 [0], given: 8

Manager
Joined: 07 May 2012
Posts: 74

Kudos [?]: 169 [0], given: 27

Location: United States
Re: The modern multinational corporation is described as having [#permalink]

### Show Tags

10 Sep 2013, 13:03
mikemcgarry wrote:
HI, there. I'm happy to help with this.

First of all, "according to the author" and "according to the passage" are essentially the same thing, as least as far as GMAT RC is concerned. I wouldn't worry about that distinction.

Prompt:
According to the passage, early chartered trading companies are usually described as

So, what does the paragraph say about these early charted trading companies?

Paragraph one = modern multinationals, and mentions only that, "Sixteenth- and seventeenth-century chartered trading companies, despite the international scope of their activities, are usually considered irrelevant to this discussion."

Paragraph two = a cogent argument about why the early charted trading companies are relevant to the discussion of modern multinationals. Folks often say they're irrelevant, but this passage argues otherwise.

Paragraph three = differences between early charted trading companies and & modern multinationals.

The main point of the passage: early chartered trading companies should be more seriously considered by scholars studying the origins of modern multinationals (this is Q1, answer C)

In every question, the main point of the passage should be kept in mind. Even details are mentioned to support a main point.

Now, the answer choices for Q4:
(A) irrelevant to a discussion of the origins of the modern multinational corporation
Yes, not only is this often argued, but in this passage, this author goes to great efforts to argue against it. The fact that he has to present such a strong argument why the early chartered trading companies are relevant is that most folks simply assume that they were irrelevant. Does that make sense? This is a very strong answer.

(B) interesting but ultimately too unusual to be good subjects for economic study
This contradicts the point of the passage --- the author says that studying the early chartered trading companies would be relevant and could be helpful in the economic study of modern multinationals. Contradicts the main point = OUT.

(C) analogues of nineteenth-century British trading firms
Weak. Yes, I suppose in some sense the 16- &17-cent chartered trading companies are analogues of the nineteenth-century British trading firms, but that's more or less irrelevant to the main point the author is making. In the study of modern multinationals, everyone looks at the nineteenth-century British trading firms and no one looks at the early chartered trading companies, and this author is saying: Wait! Look at the early chartered trading companies too. The point is not really about making sense of the nineteenth-century British trading firms --- it's about making sense of our modern multinationals. Irrelevant to main point = OUT

(D) rudimentary and very early forms of the modern multinational corporation
This contradicts the point of the passage ---- usually, when folks talk about where modern multinationals began, they look to the 19th cent, not to the early chartered trading companies. The early chartered trading companies get completely overlooked in the discussion of where the modern multinational corporation began. This author is trying to change that, but he is arguing against the irrelevance to which others have consigned the early chartered trading companies. Contradicts the main point = OUT

(E) important national institutions because they existed to further the political aims of the governments of their home countries

(A) is a strong answer, and the other four are, for one reason or another, unacceptable. Therefore, (A) must be the correct answer.

Do not underestimate the importance of the main point of any passage. There will always be a question asking about the main point, but all other questions will, in one way or another, harken back to the themes of the main point.

Does all this make sense?

Here's another RC question, for further practice.
https://gmat.magoosh.com/questions/767
When you submit your answer, the next page will have a complete video explanation of the question. Each of Magoosh's 800+ GMAT questions has its own video solution. Magoosh also has 200 lesson videos, including a whole series on GMAT RC. I suggest that Magoosh could offer you invaluable assistance in your GMAT preparation.

Let me know if you have any further questions.

Mike

I got thrown off between A and C . I couldnt figure out if the question was referring to what the author has described "early chartered trading companies" as or what other it was usually thought off about those companies , to which the author is refuting . How do I figure differentiate this in this particular question ?
_________________

Jyothi hosamani

Kudos [?]: 169 [0], given: 27

Manager
Joined: 07 May 2012
Posts: 74

Kudos [?]: 169 [0], given: 27

Location: United States
Re: The modern multinational corporation is described as having [#permalink]

### Show Tags

10 Sep 2013, 14:15
mikemcgarry wrote:
gmacforjyoab wrote:
mikemcgarry wrote:
Prompt:
According to the passage, early chartered trading companies are usually described as

I got thrown off between A and C . I couldnt figure out if the question was referring to what the author has described "early chartered trading companies" as or what other it was usually thought off about those companies , to which the author is refuting . How do I figure differentiate this in this particular question ?

Sometimes in a GMAT RC, an author will say: issue X traditionally has been analyzed this way, but I recommend advocating it that way. In other word, the author pits himself as the new expert against a long line a previous experts. That's exactly this particular author's situation. Therefore, the "usually" refers to the majority that came before the current author, not to the current author.
Does this make sense?
Mike

Sure ! Thanks for clarifying !
_________________

Jyothi hosamani

Kudos [?]: 169 [0], given: 27

Intern
Joined: 10 Jun 2015
Posts: 21

Kudos [?]: 2 [0], given: 9

Concentration: Marketing, Technology
GMAT 1: 490 Q47 V13
Re: The modern multinational corporation is described as having [#permalink]

### Show Tags

19 Jan 2016, 00:34
mikemcgarry wrote:
Hi Mike, I don't understand how we arrived at C in 1. where did we come to "and scholars should...." . Thanks.

Question #1 is a "main idea" question, the kind of question that the GMAT is guaranteed to ask about each RC passage.

1. The author's main point is that...

To attack this, first we look at the paragraphs

Paragraph one = discuss modern multinationals & their history, and mentions only that, "Sixteenth- and seventeenth-century chartered trading companies, despite the international scope of their activities, are usually considered irrelevant to this discussion."

Paragraph two = a cogent argument about why the early charted trading companies are relevant to the discussion of modern multinationals. Folks often say they're irrelevant, but this passage argues otherwise.

Paragraph three = differences between early charted trading companies and & modern multinationals.

So, in my own words, the main idea is: folks who study the history of multinationals tend to ignore the sixteenth- and seventeenth-century chartered trading companies, but they are more relevant to that history than folks realize.

Now, let's look at the whole question:

1. The author's main point is that
(A) modern multinationals originated in the sixteenth and seventeenth centuries with the establishment of chartered trading companies

A bit too strong. The author is saying --- when folks study the origin of modern multinationals, the chartered trading companies have some relevance as precursors, but this statement is saying that, essentially, the chartered trading companies and the modern multinationals are the same thing. The author argues against that in paragraph 3. This is OUT.

(B) the success of early chartered trading companies, like that of modern multinationals, depended primarily on their ability to carry out complex operations
The passage didn't really talk about the success of chartered trading companies, or what contributed or didn't contribute to their success. This is OUT.

(C) early chartered trading companies should be more seriously considered by scholars studying the origins of modern multinationals
This is quite balanced, and very close to the summary I made above. The mention of "scholars" should not be surprising. The passage is about folks studying the origins of modern multinationals --- well, exactly who would that be? My aunt Hilda? Most ordinary folks are just not going to be interested in an obscure niche of history like this. If I person actively studies it, reading book after book about the topic, then it's likely that person is a professor or graduate student --- in other words, a scholar. Scholars are the folks who study the obscure topics that most folks don't find engaging or accessible. --- this is a strong candidate for the correct answer.

(D) scholars are quite mistaken concerning the origins of modern multinationals
In GMAT RC, a term like "quite mistaken" is as strong as somebody using the F-word for emphasis in casual speech. This is about as extremist as anything you see on GMAT RC. To say scholars are "quite mistaken" is to say: they don't have a clue, they have absolutely no idea about the origins of modern multinationals. That's way to strong for what is being argued here. Here, the author says --- scholars studying the the origins of modern multinationals usually start with the period when "when the owner-managers of nineteenth-century British firms carrying on international trade were replaced by teams of salaried managers organized into hierarchies." That's a perfectly sensible and appropriate thing to study, but the author is saying --- they would understand a little bit better if they also paid some attention to the early chartered trading companies. That not at all the same as saying they are "quite mistaken." This is OUT.

(E) the management structures of early chartered trading companies are fundamentally the same as those of modern multinationals
Directly contradicted by the passage. "[The early trading companies's] top managers were typically owners with a substantial minority share, whereas senior managers' holdings in modern multinationals are usually insignificant." This is OUT.

A & B & D & E are all deeply flawed, and C is a strong choice, so C is the answer.

Again, if the passage is about an academic topic, as many many RC passages are, then don't be the least bit surprised if the word "scholar" or "professor" or similar words don't appear in the passage but do appear in the answer choices.

Does that make sense? Let me know if you have any questions.

Mike

Hi Mike,

I removed C because the passage no where mention about scholars. Will take care in future. Again Many thanks.
_________________

Abhilash
Learn, Apply, Fail, Analyse, and Practice.

Consider +1 Kudos if you find my post helpful.

Kudos [?]: 2 [0], given: 9

Math Forum Moderator
Status: Greatness begins beyond your comfort zone
Joined: 08 Dec 2013
Posts: 1524

Kudos [?]: 945 [0], given: 72

Location: India
Concentration: General Management, Strategy
GPA: 3.2
WE: Information Technology (Consulting)
Re: The modern multinational corporation is described as having [#permalink]

### Show Tags

22 Aug 2016, 00:25
Took 8 mins , including 2 mins 40 seconds to read

-The author is interested in making comparisons between early trading companies and modern day multinationals
- He eventually believes that they should be studied for their similarity with modern day multinationals

1.
"Despite these differences, however, early trading companies organized effectively in remarkably modern ways and merit further study as analogues of more modern structures."
Option (C) clearly reflects the above main point and is hence the right option.

2.
"Increases in the volume of transactions in such firms are commonly believed to have necessitated this structural change"
Option (B) is a clear word justification of the above excerpt.

3.
"The early trading companies did differ strikingly from modern multinationals in many respects. They depended heavily on the national governments of their home countries and thus characteristically acted abroad to promote national interests"
This clearly suggests that modern multinationals are not governed by the national interest of their home countries whereas early trading companies were. Hence option (E) is the right answer.

4.
"Sixteenth- and seventeenth-century chartered trading companies, despite the international scope of their activities, are usually considered irrelevant to this discussion"
Option (A) clearly states the meaning of the above excerpt – Infact, it is a clear word justification of it.
_________________

When everything seems to be going against you, remember that the airplane takes off against the wind, not with it. - Henry Ford
The Moment You Think About Giving Up, Think Of The Reason Why You Held On So Long
+1 Kudos if you find this post helpful

Kudos [?]: 945 [0], given: 72

Manager
Joined: 13 Oct 2016
Posts: 214

Kudos [?]: 115 [0], given: 134

GMAT 1: 600 Q44 V28
Re: The modern multinational corporation is described as having [#permalink]

### Show Tags

21 Apr 2017, 13:48
Hi ,

I just wanted to know the reason for selecting option E for the 3rd Question. I had to make a decision between C and E and chose C.

Could you help me out with this ??
_________________

_______________________________________________
If you appreciate the post then please click +1Kudos

Kudos [?]: 115 [0], given: 134

Manager
Joined: 13 Oct 2016
Posts: 214

Kudos [?]: 115 [0], given: 134

GMAT 1: 600 Q44 V28
Re: The modern multinational corporation is described as having [#permalink]

### Show Tags

20 May 2017, 10:28
Thanks for the explanation ?

Posted from my mobile device
_________________

_______________________________________________
If you appreciate the post then please click +1Kudos

Kudos [?]: 115 [0], given: 134

Re: The modern multinational corporation is described as having   [#permalink] 20 May 2017, 10:28
Display posts from previous: Sort by