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

Question

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Passage # 116, Date: 28-May-2020
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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.   1 
 B 
 1. The author of the passage is primarily concerned with

(A) summarizing a thesis
(B) recommending a different approach
(C) comparing points of view
(D) making a series of predictions
(E) describing a number of paradoxes

2 
 C 
 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
(B) keep labor output constant
(C) increase their competitive advantage
(D) permit business upturns to be more easily predicted
(E) cause managers to focus on a wider set of objectives

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

(A) outline in brief the author’s argument
(B) anticipate challenges to the prescriptions that follow
(C) clarify some disputed definitions of economic terms
(D) summarize a number of long-accepted explanations
(E) present a historical context for the author’s observations

4 
 C 
 4. The author refers to Abernathy’s study ( Highlighted Text ) most probably in order to

(A) qualify an observation about one rule governing manufacturing
(B) address possible objections to a recommendation about improving manufacturing competitiveness
(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

5 
 B 
 5. The author’s attitude toward the culture in most factories is best described as

(A) cautious
(B) critical
(C) disinterested
(D) respectful
(E) adulatory

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

(A) personal observation
(B) a business principle
(C) a definition of productivity
(D) an example of a successful company
(E) an illustration of a process technology

7 
 D 
 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
(E) misunderstood but promising

AnirudhaS · Accepted Answer

**The passage was free-flowing and easy to read. For a lot of questions you can easily go down to the last two choices but getting to the final answer might be slightly tricky. With this in mind, I have tried to tailor the answers which addresses this problem.

Answers are in  bold .

1. The author of the passage is primarily concerned with
(A) summarizing a thesis
 (B) recommending a different approach 
(C) comparing points of view
(D) making a series of predictions
(E) describing a number of paradoxes

Explanation of question 1 
Let us look into choices B and E. Both are potential answers, however E suggests that the passage describes a number of paradoxes. It might be tempting as the word is used, however on close inspection we find that it is not really what the author intends. The author says how can manufacturing firms improve and stay competitive. B is the clear winner.
_________________________________________________________________________________________________________________________________

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
(B) keep labor output constant
 (C) increase their competitive advantage 
(D) permit business upturns to be more easily predicted
(E) cause managers to focus on a wider set of objectives

Explanation of question 2 
I'll not spend too much time on this answer, it is pretty straightforward and is stated here  "—and therefore enhance their international competitiveness—" 
_________________________________________________________________________________________________________________________________

3. The primary function of the first paragraph of the passage is to
(A) outline in brief the author’s argument
(B) anticipate challenges to the prescriptions that follow
(C) clarify some disputed definitions of economic terms
(D) summarize a number of long-accepted explanations
 (E) present a historical context for the author’s observations

Explanation of question 3 
We can see B and E can only be possible choices. Let us zoom into B and see why it is NOT the correct choice. B says the first para anticipates challenges to the prescriptions that follow. Now, does the author prescribe things in the following paragraphs? - absolutely, but does the author anticipate challenges? Not really. The author does say there is an inherent paradox, and therefore suggests a few ways out. 
Now let as look at E, this is much clearer choice where he is giving historical references (for e.g. in 1978 to 1982 etc) about manufacturers losing their competitive advantage if they did too much cost-cutting. E is a clear winner. 
_________________________________________________________________________________________________________________________________

4. The author refers to Abernathy’s study (Highlighted Text) most probably in order to
(A) qualify an observation about one rule governing manufacturing
(B) address possible objections to a recommendation about improving manufacturing competitiveness
 (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

Explanation of question 4 
Abernathy's study showed that too much cost-cutting can be a hindrance to develop new products. Therefore, cost cutting is the one method for increasing productivity. Now what was the assertion about cost-cutting? Possibly that it hinders the new developments - therefore being detrimental to manufacturer's growth. C is a solid choice and will go with this.
_________________________________________________________________________________________________________________________________

5. The author’s attitude toward the culture in most factories is best described as
(A) cautious
 (B) critical 
(C) disinterested
(D) respectful
(E) adulatory

Explanation of question 5 
Down to A and B very easily, but which would this be out of the two? I would not say he is cautious, the author is pretty outspoken and is not afraid to share his views. Therefore, I would lean towards "critical". 
_________________________________________________________________________________________________________________________________

6. In the passage, the author includes all of the following EXCEPT
(A) personal observation
(B) a business principle
(C) a definition of productivity
(D) an example of a successful company
 (E) an illustration of a process technology

Explanation of question 6 
Again down to D and E. 
D is tricky, because when we talk about examples, it is easy to assume that an example must have a mane, for example Amazon does not do cost-cutting etc. But this is not always true, as the author does say that successful companies do it a certain way without actually naming one.
E has the word "illustration" in it, and we really have no basis to think there is some sort of illustration given by the author in this passage.
_________________________________________________________________________________________________________________________________

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 
(E) misunderstood but promising

Explanation of question 7 
Again down to A an D. 
For me personally, I don't think the tone of the author is negative to the core, and by that I mean the author does not say all manufacturers are DOOMED. he merely addresses the fact that conventional cost cutting techniques are flawed. Therefore, I would avoid choice A which has two very heavy negative words. Sure it is flawed, but ruinous?? that is pushing it isn't it?
D is much more balanced choice, where it acknowledges the fact that it is useful in some cases, but a lot more has to be done to make it adequate enough for manufacturers to follow.

DonQuixote · Answer

1. The author of the passage is primarily concerned with
(A) summarizing a thesis
 (B) recommending a different approach  -  The overall aim of the passage is to encourage companies to shy away from traditional cost-cutting measures. 
(C) comparing points of view
(D) making a series of predictions
(E) describing a number of paradoxes

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
(B) keep labor output constant
 (C) increase their competitive advantage  -  Ideally, I would look for an answer along the lines of "improve productivity" or "increase labour output while keeping amount of labour constant". In the absence of such a response, this would be what I would pick. 
(D) permit business upturns to be more easily predicted
(E) cause managers to focus on a wider set of objectives

3. The primary function of the first paragraph of the passage is to
(A) outline in brief the author’s argument
(B) anticipate challenges to the prescriptions that follow
(C) clarify some disputed definitions of economic terms
(D) summarize a number of long-accepted explanations
 (E) present a historical context for the author’s observations  -  The first paragraph gives a brief background of the situation, which eventually ties into the author's arguments and observations.

4. The author refers to Abernathy’s study (line 36) most probably in order to
(A) qualify an observation about one rule governing manufacturing
(B) address possible objections to a recommendation about improving manufacturing competitiveness
 (C) support an earlier assertion about one method of increasing productivity  -  Here, the "one method" is cost-cutting. The assertion, meanwhile, is that cost-cutting hinders innovation. Abernathy's study supports the assertion. 
(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

5. The author’s attitude toward the culture in most factories is best described as
(A) cautious
 (B) critical  -  This question appears to test vocabulary more than anything else. None of the other responses make any sense as an answer to this question, so one only needs to know the meaning of these words to answer the question. 
(C) disinterested
(D) respectful
(E) adulatory

6. In the passage, the author includes all of the following EXCEPT
(A) personal observation
(B) a business principle
(C) a definition of productivity
(D) an example of a successful company
 (E) an illustration of a process technology  -  Answers A to D can all be found within the passage. E, however, does not appear to be present.

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  -  To me, this one's a bit of a hard fight. A and B could reasonably be seen as acceptable responses; however, I feel that they do not quite fit the tone of the passage as well as D does. The author notes that cost-cutting does provide some results, but that it is limited in its ability to improve competitiveness. This makes D, in my opinion, the most suitable answer. 
(E) misunderstood but promising

geometric · Answer

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

My answers:
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

mSKR · Answer

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.

junii · Answer

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.

sea0920 · Answer

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.

Sajjad1994 · Answer

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!

JOBS07 · Answer

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 "

Request your inputs,
Thanks

GMATNinja · Answer

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...

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.

rahul5657 · Answer

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.

Rickooreoisb · Answer

GMATNinja ,

Need help with question 4.

4. The author refers to Abernathy’s study (Highlighted Text) most probably in order to

(A) qualify an observation about one rule governing manufacturing
(B) address possible objections to a recommendation about improving manufacturing competitiveness
(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

Manufacturing practise comprises of several processes / rule. Improving effectiveness can also similar comprise of several mechanism.

One such rule in this passage that comes out is the cost cutting to improve efficiency.

Abnernathy is saying that is hindering innovation which means he is qualifying rule (cost cutting) governing manufacturing practise and hence Option A makes sense - qualify (yes there) an observation (one thing which is cost cutting) about one rule governing manufacturing (cost cutting is for manufacturing).

Now (C) support an earlier assertion about one method of increasing productivity - Abnernathy is not supporting assertion of increasing productivity. He is infact weaking the claim saying in long term it will not increase productivity.

Also, earlier assertion can also mean any assertion made earlier than that sentence. Not clearly addressing.

Also for Question 7.

7. The author suggests that implementing conventional cost-cutting as a way of increasing manufacturing competitiveness is a strategy that is 
 (B) shortsighted and difficult to sustain 
  (D) useful but inadequate

Author does mention that conventional method are shortsighted given if innovation does not happen while it will result in near term benefit, it will impact future and impacting future means the methodology is difficult to help in sustaining. Please help me understand what am I missing. For Option D, the author tone is completely critizing with terms like “penny-pinching, mechanistic” and the claim it “kept away creative managers” express disapproval.

egmat · Answer

Rickooreoisb  If I may address your doubts- for  Question 4,  your confusion stems from misunderstanding what "support an earlier assertion" means.

Let's break this down:

The author makes an assertion  before  citing Abernathy:  "the cost-cutting approach hinders innovation and discourages creative people."

Then comes Abernathy's study:  "As Abernathy's study...has shown, an industry can easily become prisoner of its own investments in cost-cutting techniques..."

Key Insight:  Abernathy is supporting  the author's negative assertion  about cost-cutting, not supporting cost-cutting itself! The author says "cost-cutting is bad for innovation" → Abernathy's study proves this point.

Why Not (A) - "Qualify"? 
"Qualify" in RC means to  limit, modify, or add exceptions . If the author said "Cost-cutting usually hinders innovation, though Abernathy found some exceptions..." - that would be qualifying. But here, Abernathy is providing evidence that  strengthens  the author's criticism.

Question 7:

You're focusing only on the negative language, but look at what the author  actually  says about cost-cutting:

Positive acknowledgments:
-  "This rule does not imply that cost-cutting should not be tried" 
-  "The well-known tools...do produce results" 
- It contributes  20\%  to competitive advantage

Limitations stated:
-  "But the tools quickly reach the limits" 
- Only 20% contribution (vs 40% each for other approaches)

This is textbook "useful but inadequate" - acknowledging some value while emphasizing limitations.

Why Not (B)? 
"Difficult to sustain" implies the approach becomes harder to maintain over time. The author says it reaches its limits quickly, not that it's hard to sustain. The focus is on  limited effectiveness , not sustainability challenges.

Strategic Framework for RC Purpose Questions:

When you see "The author cites X in order to..." always:
1. Identify the author's claim  immediately before  the citation
2. Ask: Does the citation  support  (strengthen),  qualify  (limit), or  contrast  with that claim?
3. The citation's content matching the author's point = support
4. The citation adding exceptions or limits = qualify

You can practice similar RC questions  here  (you'll find a lot of OG questions) - select Reading Comprehension under Verbal and choose Medium level questions for more practice with author's purpose and tone identification.

GMATNinja · Answer

Question 4 
 
That's stretching the meaning of the words "qualify", "observation", and "rule".

The only "rule" mentioned in the passage is the “40, 40, 20” rule. Cost-cutting isn't an "observation" about that rule. Instead, it's just a part of that rule. An observation would likely have to be something that actually happened in the real world (something that could be observed). And "qualifying" such an observation would likely involve providing further details or context to limit or modify the scope of the observation.

More importantly, we aren't looking for an answer choice that DESCRIBES Abernathy's study. Instead, we're looking for something that explains WHY the author bothered to mention Abernathy's study. So even if (A) does accurately describe the study, that wouldn't make it the correct answer.

Similarly, (C) is not supposed to describe Abernathy's study, so "Abnernathy is not supporting assertion... " is not a valid reason to eliminate (C).

(C) is correct because it tells us why the author referred to the study, not because it describes the study itself.

I hope that helps a bit!

GMATNinja · Answer

Question 7 
 
Yes, an over-reliance on cost-cutting can hurt innovation, which could cause problems in the long run. But, according to the author, that is not a reason to abandon cost-cutting altogether. Refer to the end of the second paragraph:

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.

Here he author explicitly says that conventional cost-cutting DOES produce results and that it SHOULD be tried. Yes, the author discusses its flaws, but this is clearly not a complete rejection of cost-cutting.

The author does not suggest that its limited positive results are short-term or difficult to sustain. The author is basically saying, "Cost-cutting produces results, but it has flaws and limits." That fits perfectly with choice (D).

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

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

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