V36-17

Question

In order to extend the market of Fluvax in underdeveloped countries, the management of DTI Biotechnology is searching for partners in underdeveloped countries, who can manufacture the vaccine on behalf of DTI at cheaper costs for the local market.
 
Which of the following, if true, most seriously raises doubt about the success of the plan of the management of DTI ?

A. Many companies in developing countries are capable of manufacturing vaccines comparable to Fluvax.
B. Currently, DTI handles all its operations in-house, relying exclusively on its own staff.
C. Partnering for manufacturing necessitates sharing proprietary know-how, creating a risk that the partner could eventually produce Fluvax independently.
D. Because salaries in developing countries are much lower, the partner cannot entice any of DTI’s expert Fluvax staff to relocate.
E. A competitor producing a different vaccine, Gardisol, is likewise seeking partners in developing countries to expand its own market.

Bunuel · Answer

Official Solution:

In order to extend the market of Fluvax in underdeveloped countries, the management of DTI Biotechnology is searching for partners in underdeveloped countries, who can manufacture the vaccine on behalf of DTI at cheaper costs for the local market.
 
Which of the following, if true, most seriously raises doubt about the success of the plan of the management of DTI ?

A. Many companies in developing countries are capable of manufacturing vaccines comparable to Fluvax.
B. Currently, DTI handles all its operations in-house, relying exclusively on its own staff.
C. Partnering for manufacturing necessitates sharing proprietary know-how, creating a risk that the partner could eventually produce Fluvax independently.
D. Because salaries in developing countries are much lower, the partner cannot entice any of DTI’s expert Fluvax staff to relocate.
E. A competitor producing a different vaccine, Gardisol, is likewise seeking partners in developing countries to expand its own market.

A. This option actually strengthens the plan of DTI, because DTI would be able to exploit the competition among the numerous manufacturers, possibly settling for a cheaper manufacturing cost.
 
B. The current strategy of staffing does not affect the success of DTI from partnering in developing countries.
 
 C. CORRECT.  If a partner starts manufacturing independently, then DTI will not be able to extend its market in developing countries. The partner will then market Fluvax as its own product.
 
D. This option is irrelevant largely. It can be considered as a slight advantage for DTI because this statement assures that in order to capture new markets in developing countries, the current market of DTI will not be adversely affected by migration of expert DTI staff to the partner.
 
E. This option is irrelevant for DTI’s plan because Gardisol’s success has no bearing on the success of Fluvax since Gardisol is targeted at a different disease. If DTI were searching for a partner for manufacturing Gardisol then this option would be relevant.

Answer: C

TN1 · Answer

I don’t quite agree with the solution. The aim of the plan here seems to be to produce at a cheaper cost for underdeveloped countries- answer C seems irrelevant to this and D would be a better fit

bb · Answer

Hi and thank you for the question. Your point would be absolutely correct if the goal was indeed to lower the cost. However, the goal is not to lower the costs, but rather expand their market. They are still interested in growing their market in these countries (with or without a profit - we are not told).

Thus, we are looking for anything that can threaten the market growth. In case of C), if a local partner starts making vaccine that will get in conflict with the plan to growing their sales.

Hope this helps.

saumitrag · Answer

I don’t quite agree with the solution. I don’t think I fully understand the solution here. For me, the conclusion seems to be: ‘extend the market of Fluvax in underdeveloped countries’, and the premise is: ‘the management of DTI Biotechnology is searching for partners in underdeveloped countries who can manufacture the vaccine on behalf of DTI at cheaper costs for the local market.’

If we go with option C, even if the partner starts manufacturing independently, the market for Fluvax will extend, but the market for DTI’s Fluvax will not. Hence, the conclusion of extending the market of Fluvax still remains intact. It is only that DTI’s Fluvax will not expand, while the partner’s Fluvax might.

finisher009 · Answer

Hi, thanks for the explanation. Though I still have challenges with the option.

A local partner may start learning from the company and begin promoting the product independently, but that does not mean we won’t have any share of the market.
Think of a practical example: establishing Tesla manufacturing plants in China helped Chinese manufacturers learn EV production. Within a few years, local players emerged, capturing a share of the market and helping the EV sector grow. However, that does not mean Tesla’s overall market has not grown. In fact, besides North America, China has become one of the biggest markets Tesla operates in.

Did local manufacturers use Tesla’s know-how by hiring local talent trained by Tesla? Yes.
But did Tesla fail to expand its market? No. Rather, its market grew.

hr1212 · Answer

Hi  finisher009 ,

You are right to question that in real world context, but remember for strengthener and weakener questions in GMAT, you don't need the option to be bullet proof but just provide decent support or raise substantial doubt to be the correct answer. And unless you don't have any other option directly blocking the plan, it's always safe to go with the one which has the chances to break the argument like threatens success in this case. So if there's a possibility that the local competitors learn about the trade secrets and capture the local market, it creates serious doubts on the plan being formulated in the argument and hence option C does decent job to be the best contender among the given options.

RJ_Joker · Answer

bb  i am skeptical about the option D as it mentions "  Because salaries in developing countries are much lower, the partner cannot entice any of DTI’s expert Fluvax staff to relocate".  According to me if DTI experts can't go to the developing countires due to lower compensation issues then it is an issue for the DTI to expand its market becuase there would be no one to guide the local companies so according to me its also weakening their plan.

miag · Answer

Hi,

I think the question to ask yourself is do we need D) to be true? Only if we need it to be true would it seriously weaken the success of the plan.

You're right that if DTI needed to send experts, then D could be a concern. But notice what D actually says: the partner cannot entice DTI's expert staff to relocate. That means DTI's experts stay with DTI. Nothing in the plan requires relocation -  DTI could transfer knowledge via documentation, remote training, short visits, or the partner’s own staff . So D doesn't seriously threaten the plan.

Hope this helps!

Dewakinandan · Answer

This questions is plan- Goal based, plan- is searching partners in unde.... & Goal is - extend the market....

So in option c , if local own manufacturing ... Than goal is not achieved but options D is irrelevant because he is neither affect plan , neither goal

Pratham_Patil24 · Answer

I was thinking exactly in these lines. Did you get an explanation/justification to this query?

hr1212 · Answer

Hi  Pratham_Patil24 ,

That’s the correct literal understanding, but take a step back and think about what the question is really asking.

The argument says that DTI’s management wants to expand the market for Fluvax, which is currently manufactured by DTI. And you need to find an option that raises doubts about the success of DTI management’s plan.

Think about it logically. Do you really think any management would want to expand a market by giving away its trade secrets “for the greater good”? That doesn’t make much business sense. We’re essentially saying that it’s fine if your secrets get sold and some other firm starts manufacturing the product, as long as they can do it more cheaply than you. But in that case, why wouldn’t DTI just produce it themselves? Even if they can’t capture the entire market, they would still retain control over part of it instead of losing out by handing over their trade secrets on moral grounds.

I’d advise you to take these questions more at face value and not overthink them, because overthinking often pushes you down the wrong path in these problems.

V36-17

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