Outsourcing is the practice of obtaining from independent suppliers

Question

Outsourcing is the practice of obtaining from independent suppliers products or services that a company previously provided for itself.  Some analysts maintain that a company should outsource a product or service if an independent supplier can provide it at a lower cost, since the goal of any company is to maximize its profit. That goal, however, could require a company to make the opposite decision.  Companies that outsource generally dismantle some of their capabilities.  In so doing, they might make themselves totally dependent on just a few outside suppliers. Since the outsourcing companies do not control the priorities of those suppliers, the continuity of supply and thus of their own operations could be threatened. Thus, a company's long-term profitability might be better protected by not outsourcing.

In the argument given, the two boldfaced portions play which of the following roles?

A) The first describes a phenomenon the explanation of which is at issue in the argument; the second is the explanation that the argument concludes is correct.
B) The first describes a phenomenon the explanation of which is at issue in the argument; the second provides evidence in support of a proposed explanation of that phenomenon.
C) The first defines a key term used throughout the argument; the second is an intermediate conclusion drawn to support the main conclusion of the argument.
D) The first defines a key term used throughout the argument; the second is a generalization that has been used to support a conclusion that the argument rejects.
E) The first defines a key term used throughout the argument; the second provides evidence in support of an intermediate conclusion that is drawn to support the main conclusion of the argument.

chetan2u · Answer

The  first bold describes the term Outsourcing,  so C, D and E are correct.

Next, the  second bold is something that happens or a permise or a fact  but surely not a conclusion or an intermediate conclusion, so C is out.

D says that the second bold supports the conclusion that argument rejects while E says that the second bold supports the main conclusion.

The main conclusion is 'Thus, a company's long-term profitability might be better protected by not outsourcing.'
The second bold talks of the fact that generally companies that outsouce a product dismantle the factory/equipment/capabilities that were used to produce the items being outsourced.
 But doing so could tempt the firm that provides outsourced material to ask for better price that may be actually not be economiocal.

Thus, the second bold supports the main conclusion of the argument.

E

OokandGluk · Answer

What is the intermediate conclusion? Option E says that the Bold Face is an evidence to support intermediate conclusion. However I see that you have only mentioned the main conclusion and said that Option E is right?
Is the second last sentence the Intermediate conclusion

8Harshitsharma · Answer

Hi,

This is the intermediate conclusion that BF2 supports: "That goal, however, could require a company to make the opposite decision." This further supports the main conclusion as Chetan2u stated.

OokandGluk · Answer

Can we say there is another conclusion made by the analysts here?
As per, "Some analysts maintain that a company should outsource a product or service ...." , analysts claim that it is better to outsource the product or service (analyst conclusion) when it can be provided at a cheaper cost (which is premise for said conclusion) to increase profits.
Or is my thinking wrong here?
Also, how to clearly figure out the conclusions from given arguments like these? Is this question tough or easy as per 700+ standard

?

8Harshitsharma · Answer

Yes I believe you can say that it is the analyst’s conclusion. But in the given argument the complete statement “Some analysts maintain that a company should outsource a product or service if an independent supplier can provide it at a lower cost, since the goal of any company is to maximize its profit.” serves as a counter premise as it goes in the opposite direction of the author’s main conclusion.

To identify the main conclusion properly, you can refer to posts by many experts in GMAT Club. Also to practice finding main conclusion you can use the question type filter to see only “main conclusion” type problems.

We can’t really judge the difficulty of a question based on only few parameters like identifying the intermediate conclusion in this problem is really hard, but is it really needed to solve the problem correctly? I don’t think so, because you can see Chetan2u used pure logic to arrive at the correct answer without ever discussing about the know how’s of that intermediate conclusion. So I would say it’s not a very very difficult qn 805+ but you can expect such 2-3 question on your test with similar or higher difficulty than this (based on my test experiences)

Cheers

Posted from my mobile device

OokandGluk · Answer

Thanks a lot brother!! Guess I have to become better at verbal now.

HarshavardhanR · Answer

My understanding ->

Structure of the argument ->

- The author first  defines "outsourcing"  for us: opting for a 3rd party for a product/service instead of continuing to do it in-house.

BF1 - is simply the author providing a definition.

- Now, we see the  analysts' argument  presented:

>>  Their   conclusion : a company should outsource if an independent supplier can provide the product/service at a lower cost
>> The  justification  provided:  because  the goal of any company is to maximize its profit.  (less cost helps create more profit).

- Next, we see a  claim made by the author . We realize that this claim is technically  a conclusion  as we read on, because the author provides a reasoning for it in subsequent sentences.

>>  Author's conclusion : That goal  (maximizing profits) , however, could require a company to make the opposite decision  (i.e., in-house instead of outsourcing).

-  Author's reasoning for the above conclusion :

>> Companies that outsource generally dismantle some of their capabilities  (BF2). Factual truth. 
>> In doing so, they may become dependent on some suppliers
>> The companies have no control on these suppliers. So, their ops, their supply is not safe  (these could impact profits) . It could be threatened because they are dependent on suppliers they have zero control over.

The above reasoning supports the author's conclusion that the goal of maximising profits could  require i.e., make it mandatory for  a company to go in-house rather than outsource.  (because in the case of outsourcing, there could be a legitimate threat to profits because of dependency on suppliers the company has no control over).

BF2 - is clearly a fact that is used to support a conclusion made by the author.

But wait - is the above conclusion the author's main conclusion from the overall argument?

No. The author adds a little something extra here.

- "Thus, a company's long-term profitability might be better protected by not outsourcing."

>>  Main Conclusion:  A company's long-term profitability might be better protected by not outsourcing.
>>  Reasoning:  
Because  it could be that the goal of maximising profits can only be achieved ("require") by going in-house rather than outsourcing (intermediate conclusion) , it is that a company's long term profitability might actually be better protected by not outsourcing.

So, in essence ->
  BF1 - is simply the author providing a definition.  
  BF2 - is a fact that is used to support an intermediate conclusion made by the author, which is used to support the main conclusion of the argument.

Choice E  makes most sense.

Choice Analysis 
 
 Choice A:
 
 BF1
 
 Outsourcing can be called a phenomenon. 
 But the explanation of what outsourcing is is not an issue in the argument. 
 BF1 is incorrect.  
 
 BF2
 
 The second is a fact related to outsourcing (what happens when outsourcing is done). It is not an explanation of what outsourcing is. More importantly, it is considered as a factual truth. The argument does not “conclude” that it is correct. It is considered correct as is. 
 So, BF2 is also shady.

Choice B:
 
 BF1
 
 Same as choice A. Incorrect.  
 
 BF2
 
 BF2 is evidence used to support the intermediate conclusion that the goal of maximising profits could require a company to go for in-house instead of outsourcing. It is not evidence in support of some proposed explanation of the phenomenon of outsourcing. Beyond the stated definition, there is no explanation of outsourcing. “Proposed explanation of that phenomenon” does not make much sense. 
 BF2 is also incorrect.

Choice C:
 
 BF1
 
 Correct. The whole argument is concerned with outsourcing. BF1 provides the definition of this key term.  
 
 BF2
 
 BF2 is a factual truth (premise) used to support the intermediate conclusion. It is not the intermediate conclusion. 
 BF2 is incorrect.

Choice D:
 
 BF1
 
 Correct. Same as choice C.  
 
 BF2
 
 BF2 is a generalization, yes. It tells us something companies that outsource generally do. 
 It is used to support a conclusion. Also yes, as we have seen before. 
 But the conclusion BF2 supports is not something the argument rejects. Nope. That conclusion is in fact used to support the main conclusion of the argument. 
 So, BF2 is incorrect.

Choice E:
 
 BF1
 
 Correct. Same as choice C.  
 
 BF2
 
 BF2 can be considered as evidence. 
 It is indeed used to support an intermediate conclusion. 
 That intermediate conclusion is indeed used to support the main conclusion of the argument. 
 So, BF2 is also correct.

___
Harsha

K-ja · Answer

I am curious as to how BF2 is an evidence. I feel it is an "opinion" and hence I hesitated in marking this option.

OokandGluk · Answer

In the BF2, the keyword to look out for is "generally" . When we use that word, it means that we are trying to convey something which happens in a general sense (something which is prevalent/common and not opinionated) .
If the sentence had been like "Companies that outsource should dismantle some of their capabilities", then we can say that it is the Author's opinion.

HarshavardhanR · Answer

@ OokandGluk  is spot on!

Even in our everyday speech, when we use "generally", we are typically trying to pass off something as a factual truth.
For instance - "generally, countries that have huge military spending tend to be military superpowers"

This is me trying to say - "here is a fact. Typically (generally), it so happens that countries that have hige military spending also happen to be military superpowers." I as the author am trying to present this statement as a factual truth.

I could state the same fact this way - "90% of countries that have hige military spending also happen to be military superpowers.".

Both these sentences mean the same for all practical purposes. I (the author) am telling you that typically, X is the situation.

So -> " Companies that outsource generally dismantle some of their capabilities ".

This is the author telling us that typically (say, for example, in 70% of cases), companies that outsource dismantle some of their capabilities. This is presented as a factual truth. 
 
___
Harsha

nsomayaj · Answer

A) The first describes a phenomenon the explanation of which is at issue in the argument; the second is the explanation that the argument concludes is correct.
"the explanation of which is at issue in the argument" - not true. Hence reject.

B) The first describes a phenomenon the explanation of which is at issue in the argument; the second provides evidence in support of a proposed explanation of that phenomenon.
"the explanation of which is at issue in the argument" - not true. Hence reject.

So, it's among C, D, E.

The main conclusion is - "Thus, a company's long-term profitability might be better protected by not outsourcing."
Intermediate conclusion - "the continuity of supply and thus of their own operations could be threatened"
The line "Companies that outsource generally dismantle some of their capabilities" provides evidence for the intermediate conclusion.

C) The first defines a key term used throughout the argument; the second is an intermediate conclusion drawn to support the main conclusion of the argument.
"Companies that outsource generally dismantle some of their capabilities" - is not a conclusion. It is a premise or evidence.

D) The first defines a key term used throughout the argument; the second is a generalization that has been used to support a conclusion that the argument rejects.
Conclusion argument rejects? No. It supports the conclusion argument advocates.

E) The first defines a key term used throughout the argument; the second provides evidence in support of an intermediate conclusion that is drawn to support the main conclusion of the argument.
The main conclusion is - "Thus, a company's long-term profitability might be better protected by not outsourcing."
Intermediate conclusion - "the continuity of supply and thus of their own operations could be threatened"
The line "Companies that outsource generally dismantle some of their capabilities" provides evidence for the intermediate conclusion.

Hence E.

sarthak1701 · Answer

I got the same passage but different parts were highlighted in the official mock. Can't find that variation on GMAT club.

HarshavardhanR · Answer

Perhaps this one -  Link ?

Hope this helps.

---
Harsha

viswanath1 · Answer

"In so doing, they might make themselves totally dependent on just a few outside suppliers." " thus of their own operations could be threatened". Can I say these both are intermediate conclusion which is strengthened by BF2? Does sentences with " could" and " might" make them opinion/ conclusion?

Why are we taking the one below as intermediate conclusion but not the one above.

"Thus, a company's long-term profitability might be better protected by not outsourcing."

HarshavardhanR

DmitryFarberMPrep · Answer

The final sentence is really just a rewording of the prior conclusion: "  That goal, however, could require a company to make the opposite decision." Both are saying that companies might attain more profits from deciding NOT to outsource. Sure, if we want to be technical, we could put them in order, going from "not outsourcing may help long-term profits" to "the goal of maximizing profits may require a company not to outsource." From that perspective, the final sentence is an intermediate conclusion and the sentence before the second bold is the main conclusion. But we can do just as well seeing both of these as statements of the main conclusion.

As for the sentences you asked about-- "In so doing. .. . threatened," only the last part of that is an intermediate conclusion. The bold is a factual premise, and the parts that follow it are, too. The author is just describing things that may happen without providing any supporting evidence. Outsourcing companies dismantle parts of their capacity. This might make them dependent on suppliers they can't control. This leads to an intermediate conclusion: the continuity of supply and operations could be threatened. And this intermediate conclusion supports the conclusion at the end. (Whether we see that as the final conclusion, or as another intermediate that supports the conclusion in the middle of the paragraph, the answer is still the same.)

HarshavardhanR · Answer

Hey!

This one is definitely tricky. Some nuances:

- At a high level, one can make the case that both the statements are essentially stating the main conclusion. The core idea in both cases is - better profits by not outsourcing.

- That said, from what I understood, the last sentence  made a little more sense  as an intermediate conclusion. Let me try to explain my stance.

(1) Given the idea that  a company's long-term profitability might be better protected by not outsourcing/staying in-house, a company which has goals of maximizing profit might need to stick to in-house capabilities rather than outsourcing.

- Outsourcing==>dependency==>lack of control==>threat to continuity of supply and ops==> So,  not outsourcing gives better long-term protection in terms of profitability -> Therefore, a company may have to stay in-house (opposite decision of outsourcing) in order to get maximum profits.
  
-   Abstracted:  in the longer run, as far as profits as concerned, a company is better protected by not outsourcing. Therefore, a company which wants to maximize profits may have to stay away from outsourcing.
 
  Crudely put:    I get better profit protection by not outsourcing -> therefore, given I want to ensure max possible profit, I may have to take the decision of not outsourcing.

This sequence makes a lot of sense.

This is what makes me think of the last sentence as the IC, that supports the MC.

---
Harsha

Outsourcing is the practice of obtaining from independent suppliers

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Outsourcing is the practice of obtaining from independent suppliers

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