A manufacturer of men’s dress socks sought to increase profits by incr

Question

Competition Mode Question

A manufacturer of men’s dress socks sought to increase profits by increasing sales. The size of its customer pool was remaining steady, with the average customer buying twelve pairs of dress socks per year. The company’s plan was to increase the number of promotional discount-sale periods to one every six months.

Which of the following, if it is a realistic possibility, casts the most serious doubt on the viability of the company’s plan?

A. New manufacturing capacity would not be required if the company were to increase the number of pairs of socks sold.

B. Inventory stocks of merchandise ready for sale would be high preceding the increase in the number of discount-sale periods.

C. The manufacturer’s competitors would match its discounts during sale periods, and its customers would learn to wait for those times to make their purchases.

D. New styles and colors would increase customers’ consciousness of fashion in dress socks, but the customers’ requirements for older styles and colors would not be reduced.

E. The cost of the manufacturer’s raw materials would remain steady, and its customers would have more disposable income.

debjit1990 · Answer

Ans: C

The manufacturer’s competitors would match its discounts during sale periods, and its customers would learn to wait for those times to make their purchases.

Raxit85 · Answer

Goal:A manufacturer of men’s dress socks sought to increase profits by increasing sales. 
Premise: The size of its customer pool was remaining steady, with the average customer buying twelve pairs of dress socks per year. 
Plan: The company’s plan was to increase the number of promotional discount-sale periods to one every six months.

Which of the following, if it is a realistic possibility, casts the most serious doubt on the viability of the company’s plan?

A. New manufacturing capacity would not be required if the company were to increase the number of pairs of socks sold. - Strengthening the argument instead of weakening.

B. Inventory stocks of merchandise ready for sale would be high preceding the increase in the number of discount-sale periods. - Again strengthening of plan instead of casting doubt.

C. The manufacturer’s competitors would match its discounts during sale periods, and its customers would learn to wait for those times to make their purchases.- Aha! If competitors would also match the similar discounts during those periods and customers are smart enough to make wise call for such purchases then plan of the manufacturer may crumble. So, weakening the viability of the plan.

D. New styles and colors would increase customers’ consciousness of fashion in dress socks, but the customers’ requirements for older styles and colors would not be reduced. - Seems irrelevant.

E. The cost of the manufacturer’s raw materials would remain steady, and its customers would have more disposable income. - Strengthening the plan, 180 degree answer.

Imo. C

jpan · Answer

I think C, because If the customers learnt to wait for the discount periods, the existing sale of the conpany would reduce, not to mention that if competitors also followed suit, the number of socks bought from this company might even decrease compared to before the strategy.

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Leadership · Answer

Paraphrasing - Customer size same. Increasing sale period will lead to increased sales. Plan - same customers will buy more than what the buy before. A. New manufacturing capacity would not be required if the company were to increase the number of pairs of socks sold. - This is irrelevant. We are looking for a relationship between Increasing sale period and increasing sales. Out

B. Inventory stocks of merchandise ready for sale would be high preceding the increase in the number of discount-sale periods. - Inventory is high but how it would convince customers to buy more? Out

C. The manufacturer’s competitors would match its discounts during sale periods, and its customers would learn to wait for those times to make their purchases. - Ok, when the competitors followed the same discount and customers waited for these sales, then it will weaken the manufacturer's plan of attracting customers to buy more from them. Keep it

D. New styles and colors would increase customers’ consciousness of fashion in dress socks, but the customers’ requirements for older styles and colors would not be reduced. - The plan is to introduce sale/discount and not to introduce new fashion. Out

E. The cost of the manufacturer’s raw materials would remain steady, and its customers would have more disposable income. - This is irrelevant. Out

'C' is the Winner

eakabuah · Answer

The right answer is C.

Objective: A manufacturer of men’s dress socks sought to increase profits by increasing sales.
Premise: The size of its customer pool was remaining steady, with the average customer buying twelve pairs of dress socks per year.
Plan of the Company: The company’s plan was to increase the number of promotional discount-sale periods to one every six months.

From the argument above, the company intends to increase its profits by increasing sales. This comes from a background that the company's customer pool was remaining steady, and on average, a customer purchases twelve pairs of socks per year. So the manufacturer plans to increase the number of promotional discount-sale periods to one every six months.

Our task is to weaken the effectiveness of the plan.

Option A states that new manufacturing capacity would not be required if the company were to increase the number of pairs of socks sold. This does not weaken the argument in any way. A could rather be seen as somewhat strengthening the plan as the manufacturer will not be required to spend money to increase its manufacturing capacity.

Option B states that inventory stocks of merchandise ready for sale would be high preceding the increase in the number of discount-sale periods. This is irrelevant to the plan of the manufacturer.

C. The manufacturer’s competitors would match its discounts during sale periods, and its customers would learn to wait for those times to make their purchases. This weakens the effectiveness of the plan. So if the customers will wait to purchase only during the promotion periods, then the effectiveness of the plan above is in question as the manufacturer may not see the expected increase in sales revenue. Purchases will be high during the promotion period and low during the periods when the promotion is not running. Besides, if their competitor matches their discount, then there is little chance that the manufacturer can attract new customers in order to increase their annual revenue.

D. New styles and colors would increase customers’ consciousness of fashion in dress socks, but the customers’ requirements for older styles and colors would not be reduced. This neither strengthens or weakens the argument. We cannot determine based on this information if purchases will go up or come down.

E. The cost of the manufacturer’s raw materials would remain steady, and its customers would have more disposable income. As in D, we are unable to automatically conclude based on this information that purchases of socks would increase or that the number of customers of the manufacturer will go up.

exc4libur · Answer

ARGUMENT
  company wants to +profit by +sales; 
  increase number of sales period to one every semester;

WEAKEN
(A) strengthens;
(B) does not weaken;
(D) does not weaken;
(E) does not weaken;

Ans (C)   customers would not increase number of pairs bought per year.

chaitralirr · Answer

IMO C

The stimulus states that the sales need to be increased so this can be done by using sale discount once in 6 months.

We need to find an answer which doesn't make this plan realistic.

Option C states that consumers will wait for the discount period to buy socks hence overall sales will remain same. Similarly other manufacturers will also compete and give discounts hence this will not increase the sales

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ferrero57 · Answer

P1: increase profits by increasing sales
Plan: increase the number of promotional discount-sale periods to one every six months

Prethinking : Thus, a potential weaker must say that despite increase in discount sales periods, sales will not increase. 
Option B fits in well.

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GMATWhizTeam · Answer

It’s a typical Plan-Goal argument.
We can use a simple framework for solving this question
 STEP 1 
 Identify Plan - increase the number of promotional discount-sale periods to one every six months
 Identify Goal - increase profits by increasing sales

STEP 2 
 What happened during the planning & execution stage? 
• The manufacturer has planned to increase the number of discount sales. There will be one such sales every six months (so currently he holds discount sales but likely not one every six months). He reasons that by increasing the number of such sales, he will be able to attract a significantly higher number of customers than its current steady pool (perhaps by luring away his rivals’ customers). And that is how, he plans to achieve the increase in sales and thereby in profits.
• What he may not have thought of is about the other outcomes of his plan.
• What if his rivals also come up with such discount sales with similar/higher discounts and worse around the same time ? That would definitely impact the number of customers that his discount-sales is supposed to attract.
o  Weakener#1  – The rivals of the socks manufacturer also plan to hold similar discount sales around the same time as the manufacturer holds his.
o  Weakener#2  – The rivals of the socks manufacturer offer similar/higher discounts during their discount sales to retain their customers/lure new ones.
 ANSWER CHOICE ELIMINATION 
A. New manufacturing capacity would not be required if the company were to increase the number of pairs of socks sold.

( This choice talks about the manufacturer’s need to increase his production capacity. This means that there is no extra costs involved in stepping up production to meet increased sales demand. This choice, if anything supports the plan’s success .)

B. Inventory stocks of merchandise ready for sale would be high preceding the increase in the number of discount-sale periods.

( High stocks before the discount period simply means stocks available for sales during discount periods. This choice does not impact the argument and is out of scope .)

C. The manufacturer’s competitors would match its discounts during sale periods, and its customers would learn to wait for those times to make their purchases.

( This choice is in line with the weakeners we came up with in STEP 2. Correct choice.)
 
D. New styles and colors would increase customers’ consciousness of fashion in dress socks, but the customers’ requirements for older styles and colors would not be reduced.

( This choice talks about customer preferences and requirements. If their requirements for older styles is not reduced then, there is a higher likelihood, they would purchase during discount periods which typically also contain older styles. If anything this choice in a remote way supports the plan )

E. The cost of the manufacturer’s raw materials would remain steady, and its customers would have more disposable income

( This choice supports the plan’s success. If costs of production do not increase and customers have more money to spend, it is good news for the manufacturer)

aorozco · Answer

I have a question here:
The objective is to weaken the argument that the company can "increase profits by increasing sales". Isn't B a viable answer given that the increase in inventory capacity will also increase the costs, thus less profit, which will weaken the argument? What do you think?  GMATNinja

Thank you in advance!

Davronjon · Answer

(C) The manufacturer’s competitors would match its discounts during sale periods, and its customers would learn to wait for those times to make their purchases. This statement casts the most serious doubt on the viability of the company’s plan. If customers learn to wait for sales and competitors match the discounts, this could result in the company not increasing its sales as planned. Instead, it might simply shift when sales occur without increasing the overall number, and potentially decrease profit margins due to the discounts.

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Adarsh_24 · Answer

Maybe because we need an additional assumption that the current space is not enough for the increase in inventory.

A manufacturer of men’s dress socks sought to increase profits by incr

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A manufacturer of men’s dress socks sought to increase profits by incr

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