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# Until now, American cell-phone manufacturers enjoyed a large

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SVP
Joined: 03 Jan 2005
Posts: 2233

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22 Feb 2005, 23:05
Sure E assumes that the Chinese cell phone component imports could be partly from US, which is a reasonable assumption to me. D on the other hand, do not counter the argument in the stem about less profit because of less market share argument, no matter how many assumptions you are going to have.
Director
Joined: 19 Nov 2004
Posts: 556
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22 Feb 2005, 23:52
I am of the opinion that this is just a badly designed GMAT question. The answer does not make too much sense to me even after thorough analysis.
I hope that ETS does not come up with such a question
GMAT Club Legend
Joined: 07 Jul 2004
Posts: 5043
Location: Singapore
Re: CR - American cell-phone manufacturers [#permalink]

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23 Feb 2005, 00:00
HongHu wrote:
I agree it is (E).
Stem: Chinese companies now have greater shares of the market. Therefore Amercian companies will see a diminishing shar of profits from China.

(A) Very few cell phones manufactured in China will be exported for sale in the United States.
Do not attack the argument. No exports will not help American companies' profit from China.

(B) There are still more cell phone users in the United States than China, despite the latter's greater population.
Yes, but American companies' profit in China may still be decreasing.

(C) American companies still claim large shares of sales in China of other electronic devices such as computers.
It may be true, yet it does not help American companies' profit in cell phone sales in China.

(D) Many American cell phones are considered to be of superior quality to those produced by Chinese manufacturers.
Again, it may be true. However the fact is that American cell phone companies' market share in China has been decreasing when Chinese companies' claiming larger and larger market share, as claimed in the question stem. In other words the good quality has not helped with the declination of the market share, thus cannot help with the declination of the profit from China.

(E) Cell phones manufactured by Chinese companies use many imported electronic components.
The apparent increase in Chinese companies' market share is less harmful to American companies if this is true, as American companies simply shift their focus from whole product to electronic components and can still maintain their profitability in China.

Isn't this too big an assumption. Nowhere in the argument are we told that the electronic components are coming from American. Neither are we told any future plans that the American companies might have (i.e. shifting their focus to electronic components export). Essentially, there is no problem with this argument, it's just the assumption we have to make in order for this statement to hold.
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23 Feb 2005, 08:30
It asks for weakening, the other choices do not do that. This argument however, you can start from here and argue away. You don't have to do lots of assumptions. As long as the possibility is there, it is sufficient. It didn't ask you to argue.

My experience is that this is not alone in this type of questions. It is likely that you'll see a question where the correct choice does not directly answer the questions, but only implies the possibility of answering the question, while the others do not answer the question at all.

For example, the sales tax school funding question. It says authorities decided to use sales tax instead of property tax to fund school. Although the sales tax is not enough currently, it is expected that the school funding may not decrease. The correct choice for this question is that a new mall is openning up and would bring in new sales revenues and new sales taxes. Again this choice do not tell you that the amount of tax increase will be sufficient for the school fund. However this one tells you that it has the potential to make that happen, while the others do not answer the question about why the funding level would not drop.

I can assure you that you'll see more of this type of questions. Once you know how to reason this type of questions, you'll get a big chunk of the CR questions out of the way.
Manager
Joined: 25 Jan 2005
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23 Feb 2005, 08:53
Honghu:
I'm still trying to analyze and think how to satisfy myself with the choice of E. Probably, these type of questions made the difference for my score

My initial choice was D(I was wrong). Probably, it can also be argued that the Superior quality doesn't mean more sales to American companies. But whereas, the more components are imported by chinese companies the more they are expected to get market share.
We need to have a complete paradigm shift for these type of CR questions.

Aryan
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Joined: 30 Dec 2004
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23 Feb 2005, 09:57
I'm late on this one but I would say E....If American cell phones would see a diminishing share of profits the implication to me is that Chinese cell phones would see a higher share of profits. But if Chinese cell phones are made up of imported components that means that even though they are gaining a larger share of the cell phone market their profit margin might not be as high due to the cost of imported parts....I was extremely close to choosing D but I ruled it out because the argument hinges on consumer preference (i.e. "superior quality") and you know how fickle consumers can be....now I have to scroll down and see what everyone else wrote.
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Senior Manager
Joined: 30 Dec 2004
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23 Feb 2005, 10:00
MA wrote:
qhoc0010 wrote:
Yes. But I don't think this is a good GMAT question because both (D) and (E) contain certain assumptions in order for it to be right.
(D) assumes China's cellphones have lower quality.
(E) assumes imported electronic items come from US.

Let me add my 2 cents:
(D) assumes Chinese customers prefer superior quality cell phones.
(E) assumes imported electronic items come only from those US companies which currently are in chinese market.

Guys I don't you think you have to assume that the parts came from the United States for this argument to actually be right.
_________________

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23 Feb 2005, 10:14
1
KUDOS
aryan wrote:
Probably, it can also be argued that the Superior quality doesn't mean more sales to American companies.

Your problem with this is that this is not a point for any further arguing. In the stem it clearly stated that the fact is Amercian companies' market share has been and is decreasing. The superior quality argument will not help because the fact is already given. The link you need to attack is why decreasing market share doesn't necessarily mean decreasing profit margin. You cannot attack the given fact and hope to change it. It is already established.
Senior Manager
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23 Feb 2005, 10:23
HongHu wrote:
aryan wrote:
Probably, it can also be argued that the Superior quality doesn't mean more sales to American companies.

Your problem with this is that this is not a point for any further arguing. In the stem it clearly stated that the fact is Amercian companies' market share has been and is decreasing. The superior quality argument will not help because the fact is already given. The link you need to attack is why decreasing market share doesn't necessarily mean decreasing profit margin. You cannot attack the given fact and hope to change it. It is already established.

good point HongHu didn't think of that!
_________________

"No! Try not. Do. Or do not. There is no try.

Manager
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23 Feb 2005, 12:06
Thank you HongHu.
Director
Joined: 18 Feb 2005
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24 Feb 2005, 20:31
E is an assumption out of scope....I would go with D.
Manager
Joined: 25 May 2011
Posts: 152

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12 Jan 2012, 10:05
HongHu wrote:
aryan wrote:
Probably, it can also be argued that the Superior quality doesn't mean more sales to American companies.

Your problem with this is that this is not a point for any further arguing. In the stem it clearly stated that the fact is Amercian companies' market share has been and is decreasing. The superior quality argument will not help because the fact is already given. The link you need to attack is why decreasing market share doesn't necessarily mean decreasing profit margin. You cannot attack the given fact and hope to change it. It is already established.

Good explanation
I chose D at first. I read lots of posts, and NOW I can understand why my answer was wrong
But I say again: To choose E, we have to assume that those components are imported from US
Re:   [#permalink] 12 Jan 2012, 10:05

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