The outsourcing of production factories to locations overseas from com

Question

New Project RC Butler 2019  -  Practice 2 RC Passages Everyday   
Passage # 291, Date : 26-Aug-2019
 This post is a part of New Project RC Butler 2019 .  Click here for Details

The outsourcing of production factories to locations overseas from companies' home countries has been a hallmark practice of multinational brands since the 1990s and is lauded by some economists as advancing the well-being of people in both the home country and the production country. However, not all of the benefits attributed to this globalization practice necessarily accrue, and there are concerns about outsourcing that are not readily addressed within the formulations of economic theory. First, a home company that separates its brand and its product as completely as possible and places the brand as paramount hardly sends a message that product quality is central to its operations; more likely, all of its innovation attempts will focus on branding, and such a company will settle with a product that is merely (and maybe barely) good enough. Dismissing this point, economists may cite the law of comparative advantage: outsourcing allows both companies involved to pursue greater profit and well-being according to their capabilities. Specifically, workers in the companies of manufacture should be paid more than they would be paid otherwise, even if they are paid less than factory workers in the original country; meanwhile, workers in the home country should be pushed to increase their skills and education and move to higher-skill jobs that are less available in the country of manufacture. Whether displaced workers in the home country acquire skills and make this shift in any reasonable timeframe is hardly demonstrated, however, and while outsourcing may create value by lowering costs, it has been asserted that workers in the countries of production are making no more after outsourcing than previously and hence in effect are enjoying none of the new profit. The CEO of one outsourcing company, when pressed on this point by a reporter, explained that, as the employees of those factories were not employees of his company, he could not be responsible for them. He asked the reporter whether journalists should be expected to know, and be responsible for, the manufacturing conditions of the paper on which their articles are printed. This comment, as much as it defends corporations, highlights the broadest form of worry about outsourcing: in global supply chains with increasingly distant and opaque connections, responsibility is too easy to shirk and maybe even impossible to determine.   1  
 C 
 1. The primary purpose of the passage is to

A. explain why a particular business strategy has been less successful than was once anticipated
B. propose an alternative to a particular business strategy that has inadvertently caused damage
C. present a concern about the possible consequences of pursuing a particular business strategy
D. make a case for applying a particular business strategy on a larger scale than is currently practiced
E. suggest several possible outcomes of companies' failure to understand the economic impact of a particular business strategy

2  
 D 
 2. The passage mentions which of the following as a possible consequence of companies' outsourcing of production factories?

A. The companies may be able to produce a greater number of products by lowering prices.
B. The companies may advance the well-being of people in both the home country and the production country.
C. The companies may send a message that product quality is central to their operations.
D. The companies may benefit from lower costs while workers in the country of production fail to benefit.
E. The companies may exploit workers who have little legal recourse or opportunity to bargain collectively.

3  
 B 
 3. According to the passage, which of the following is most likely a motivation of a company that outsources its production factories?

A. It is motivated to shirk responsibilities that are clearly its own.
B. It is motivated to focus on marketing its brand and somewhat ignore the quality of its product.
C. It is motivated to sell its existing product lines at lower prices.
D. It is motivated to capture all of the economic benefit that accrues from switching to outsourcing, leaving none for the workers involved in the country of production.
E. It is motivated to ensure that certain workers move to higher-skill jobs in a reasonable time frame.

Source:  GMAT Free (1) 
Difficulty Level:   700

Bikramjeet · Answer

please help me eliminate answer choice a in question 1

Sajjad1994 · Answer

Official Explanation

1. The primary purpose of the passage is to

Difficulty Level:   600

Explanation

We are asked for the purpose of the passage. We already know it: the author is pointing out problems and concerns with production outsourcing. Let's look for that in the answer choices. At first blush, choice (C) looks closest. Let's find objective fault with the other answer choices.

(A)  is out because the author hasn't said that outsourcing hasn't been successful and it would be compatible with everything that the author says, in fact, that it has been very profitable, for example.

(B)  is out because the author proposes no alternative; he doesn't even say, for example, that companies should stop outsourcing.

(D)  is way off because, according to  (D) , the author would endorse outsourcing and want more.

(E)  is better because there is a hint of the CEO not understanding responsibility in this passage and that responsibility is maybe even  "impossible to determine."  But that's a parting thought, not the meat of the passage, and the meat of the passage includes also the brand/product point, which is something that companies appear to understand fully.

So while  (C)  is a little odd-sounding in using the singular "concern," but we could accurately paraphrase the point of the passage as a single concern:  "production outsourcing is not all it's hyped to be, when it comes to product quality or mutual benefit."

The correct answer is (C).

Hope it helps

shubhamchaudhary · Answer

Please help me eliminate in Question 3 !!!!

jaiswalicsi · Answer

For Question 1 , I chose option A using below cues ....Where I am wrong ?

However, not all of the benefits attributed to this globalization practice necessarily accrue, and there are concerns about outsourcing that are not readily addressed within the formulations of economic theory.......

however, and while outsourcing may create value by lowering costs, it has been asserted that workers in the countries of production are making no more after outsourcing than previously and hence in effect are enjoying none of the new profit.

Sajjad1994 · Answer

Official Explanation

3. According to the passage, which of the following is most likely a motivation of a company that outsources its production factories?

Difficulty Level:   700

Explanation

In this question, the answer choices slant in the correct direction, which is that outsourcing is subject to concerns and may fail to achieve what it's praised for. So we will have to get more precise. The  "likely motivation"  phrase in the question doesn't want us or require us to engage of mind-reading of people we don't know; the answer will be most likely because it has been stated or implied by the passage, and the other answer choices will have objective defects. Let's find objective defects.

(A)  is out because the other grants, in the last phrase, that the responsibilities are not clear.

(B)  should remain in, as it's close to the author's first big concern about brand and product.

(C)  is plausible, but I don't think prices were discussed. I go back and check: indeed, there is no mention of prices. We hear that costs are lowered, but costs could be lowered without prices being lowered.  (C)  is out.

(D) , like  (A) , is too harsh on the companies to fit the passage. The author raises the possibility that workers benefit little, but not as an express objective of the companies--who don't, after all, have a clear enough picture of this fact to be responsible, and  (D)  is inconsistent with that fact.

(E)  is way off, because no noble motivation has been ascribed to the companies.

We confirm that  (B)  is correct: in outsourcing, the company  "sends a message that product quality is central to its operations" ; this comment and the following phrase imply that the company is making conscious decisions that marketing brand is more important.

The correct answer is (B).

Hope it helps

Sajjad1994 · Answer

For question #1 please read my response in below link https://gmatclub.com/forum/the-outsourc ... l#p2433208 Hope it helps

siddhantvarma · Answer

3. According to the passage, which of the following is most likely a motivation of a company that outsources its production factories?

A. It is motivated to shirk responsibilities that are clearly its own.
B. It is motivated to focus on marketing its brand and somewhat ignore the quality of its product.
C. It is motivated to sell its existing product lines at lower prices.
D. It is motivated to capture all of the economic benefit that accrues from switching to outsourcing, leaving none for the workers involved in the country of production.
E. It is motivated to ensure that certain workers move to higher-skill jobs in a reasonable time frame.

Can someone please help me understand why D is the wrong answer choice in this:
"However, not all of the benefits attributed to this globalization practice necessarily accrue, and there are concerns about outsourcing that are not readily addressed within the formulations of economic theory."
This suggests that the companies think that outsourcing will give them economic benefits. What am I doing wrong here?
I also fail to understand how B is the correct answer in this question. Can someone also explain that? The official explanation doesn't explain it very clearly to me.

thanmayee_9 · Answer

Explanation for the 2nd question please?

Pablopikachu · Answer

I don't understand why B is the right ans .  GMATNinja  or any other expert, pls help.

I get that the passage mentions that by outsourcing, the company sends a message that product quality is  not  central to its operations, but isn't that an  unintended mistake ? Why would a company do so on purpose? 
Also, while it says that   it is likely   that the company will focus more on branding and settle with a mediocre product, that's clearly the  author's opinion , not a fact.

(I've Highlighted the parts in the para that indicate that it's the author's opinion) :-

First, a home company that separates its brand and its product as completely as possible and places the brand as paramount hardly sends a message that product quality is central to its operations;  more likely,  all of its innovation attempts will focus on branding, and such a company will settle with a product that is merely (and  maybe barely)  good enough.

napolean92728 · Answer

1. The primary purpose of the passage is to

The correct answer is: C. present a concern about the possible consequences of pursuing a particular business strategy 
 Here's why C is correct: 
The passage focuses on the concerns and drawbacks of outsourcing by multinational corporations. While it acknowledges the economic arguments in favor of outsourcing (e.g., comparative advantage, lower costs), the overall tone is critical and centers around the ethical, economic, and social problems that arise, particularly regarding responsibility, product quality, and worker well-being.
 The key sentence that reflects this purpose is:  
 
  This reinforces that the  main purpose  is to  raise concerns  about  what happens when companies engage in outsourcing , especially when it leads to a disconnect between responsibility and outcome.

Reasons to eliminate the other options: 
 A. explain why a particular business strategy has been less successful than was once anticipated  
 
  This would imply that outsourcing has failed overall, but the passage does not claim outsourcing is a failure—it acknowledges its economic success in some areas.  
  The critique is about consequences and responsibilities, not effectiveness.   
  B. propose an alternative to a particular business strategy that has inadvertently caused damage  
 
  The passage does not propose any alternatives to outsourcing.  
  It focuses on issues and concerns, not solutions or alternatives.   
  D. make a case for applying a particular business strategy on a larger scale than is currently practiced  
 
  The passage is actually critical of outsourcing; it would not advocate expanding it further.  
  So this is the opposite of what the passage does.   
  E. suggest several possible outcomes of companies' failure to understand the economic impact of a particular business strategy  
 
  The passage is more focused on the ethical and social impacts, not a misunderstanding of economic theory.  
  It critiques economic theory for being too limited rather than suggesting companies don't understand it.

2. The passage mentions which of the following as a possible consequence of companies' outsourcing of production factories?

The correct answer is: D. The companies may benefit from lower costs while workers in the country of production fail to benefit.

Why D is correct: 
The passage explicitly discusses this point: 
 
 This directly states that companies enjoy cost savings while workers in the production countries do not benefit, which is exactly what option D describes.

Reasons to eliminate the other options: 
 A. The companies may be able to produce a greater number of products by lowering prices.  
 
  The passage does not discuss increased production volume or lower prices for consumers.  
  It's focused on profits, responsibility, and wages, not production scale.   
  B. The companies may advance the well-being of people in both the home country and the production country.  
 
  This is something economists argue, but the passage questions or critiques this claim.  
  The passage does not endorse this as a clear consequence—it highlights doubt about it.   
  C. The companies may send a message that product quality is central to their operations.  
 
  In fact, the passage says the opposite:

So this one is directly contradicted.   
  E. The companies may exploit workers who have little legal recourse or opportunity to bargain collectively.  
 
  While exploitation is implied, the passage does not explicitly mention legal recourse, labor rights, or collective bargaining.  
  This idea would require assumptions not made in the passage, so it's not safe to choose.

3. According to the passage, which of the following is most likely a motivation of a company that outsources its production factories?

The correct answer is: B. It is motivated to focus on marketing its brand and somewhat ignore the quality of its product.

Why B is correct: 
The passage discusses how companies that outsource production prioritize their brand over product quality, especially when they separate the brand from the actual manufacturing: 
 
 This makes B the best-supported choice, as it directly captures the motivation to focus on branding at the expense of product quality.

Reasons to eliminate the other options: 
 A. It is motivated to shirk responsibilities that are clearly its own.  
 
  The passage does suggest shirking responsibility happens, but not that it is the main motivation for outsourcing.  
  That’s more a consequence than a motivation described.   
  C. It is motivated to sell its existing product lines at lower prices.  
 
  The passage does not mention selling products at lower prices as a goal or result.  
  It's focused on cutting production costs, not pricing strategy.   
  D. It is motivated to capture all of the economic benefit that accrues from switching to outsourcing, leaving none for the workers involved in the country of production.  
 
  This may happen in practice, and is asserted, but the passage does not claim that capturing all profit is an explicit motivation.  
  This is more an effect or critique, not a clearly stated intent.   
  E. It is motivated to ensure that certain workers move to higher-skill jobs in a reasonable time frame.  
 
  Actually, the passage criticizes this assumption, saying it is  "hardly demonstrated."   
  So this is not a motivation of companies, but rather a theoretical justification used by economists.

The outsourcing of production factories to locations overseas from com

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The outsourcing of production factories to locations overseas from com

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