A growing company seeks a new CEO. The companywhich has always been

Question

A growing company seeks a new CEO. The company—which has always been led by members of one family—wants to make a change in order to generate revenue quickly, possibly by hiring a famous CEO. Promoting from within has been a successful strategy for the company, yielding many of its most effective high-level managers. However, many companies are now hiring famous CEOs who are famous because they have impeccable qualifications and experience running many different kinds of companies.

On the basis of the information provided, select Famous CEO for the principle that, if accepted, would most strongly imply that the company should hire a famous CEO, and select Promote from within for the principle that, if accepted, would most strongly imply that the company should promote someone within the company to the position of CEO. Make only two selections, one in each column.

egmat · Accepted Answer

Here's a detailed solution to this question.

Dataset: 
 
 Interpretation:

The objective of the company is to
 
 Change leadership from family led to hiring a new CEO
 Generate Revenue Quickly   
 Strategy 1: Hire a Famous CEO (from outside the company) for the following reasons:
 
 Generate revenue quickly 
 CEO will have impeccable qualifications 
 CEO will have diverse experience   
 Strategy 2: Promote from within (from within the ranks of the company) for the following reasons:
 
 It is the current strategy in place. 
 It has been successful in yielding highly effective managers/leaders

Question Stem Analysis 
 
The given table consists a list of 5 statements. These are principles we need to evaluate. Keeping in mind the data provided/summarised above, from these five choices we need to select one principle which, if accepted by the company, will help the company choose strategy 1, and another principle which, if accepted by the company, will help the company choose strategy 2.

Statement Analysis 
 
This choice mentions "remaining profitable". This deals with revenue indirectly; however, it does not mean the same as "generating revenue quickly". Hence, this choice can be eliminated for both columns.

At first glance, this choice comes across as vague because it doesn't mention "CEO" or "promoting from within". And so, one is tempted to eliminate this choice as a knee-jerk reaction. However, that would be a bad decision. Let's dig deeper. This statement says that if a current strategy adopted by the company is successful, then that company should stick to that strategy. The dataset mentions that the current strategy is to "promote from within" and that so far it has been "successful" in yielding highly effective managers. Hence, if this statement is adopted by the company as a principle, it leads us to believe that the company should promote from within. Hence, this is a valid answer for column 2.

This statement mentions "most experience in the company's specific industry". This hasn't been mentioned as a reason for adopting either of the two strategies. And, if we reason this further, "most experience in the company's industry" is not a factor exclusive to those working in the company. Candidates outside the company but within the same industry could have more experience in the company's industry. Hence, this choice can be eliminated for both columns.

This statement satisfies 2 out of the 3 reasons for hiring a famous CEO (Strategy 1). Hence, this is a valid answer for column 1.

This choice talks about "alienation". Again, there's no direct mention of "alienation" in the dataset. And, if we reason this further, "alienation" is not something exclusive to "hiring a famous CEO from outside the company". Although strategy 1 could cause alienation of the company's employees, so could strategy 2. Can we say for sure that if someone is promoted from within, the other employees of the company who felt equally/more qualified won't also feel alienated? Since, this is not an outcome exclusive to either of the two strategies, we can eliminate this as an answer for both columns.

Therefore, the answer to column 1 is Statement D, and the answer for column 2 is Statement B.

Hope this helps.
Happy learning!

-Abhishek

Apt0810 · Answer

For famous CEO:A company will often see a quick rise in revenue immediately after hiring a CEO with experience in various industries,so here if the company will use the promotion from within then the quick rise may not be possible since the person from within will not have industry wide experience.

Promote from within: A company should not dispense with a current strategy unless that strategy has proven to be unsuccessful,so here if the internal CEO is doing great then it would be a risky attempt to bring an outside CEO,because that strategy either may backfire due to incompatibility issues or may be a boon for the company (so success would be baesd on more probabilistic cases )

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Sajjad1994 · Answer

Official Explanation

RO1

No matter which hiring strategy the company chooses, its CEO will be responsible for ensuring that the company remains profitable, and the company should be careful not to alienate its employees. Thus, the first and fifth principles do not imply that one hiring strategy is preferable to the other. The third principle also does not favor one strategy over the other, since it is possible that either a candidate from within the company or a famous CEO from outside the company might have the most experience in that company’s specific industry.

The second principle indicates that a current strategy should not be abandoned unless it is unsuccessful. The company’s current practice of promoting from within the company has been a successful strategy, so the second principle would indicate that the company should not abandon that strategy to hire a famous CEO.

The company desires to generate revenue quickly, and the fourth principle indicates that this is often the case immediately after hiring a CEO with experience in various industries. Although it is possible that a candidate from within the company has experience in other industries, the information provided indicates that a famous CEO would necessarily have impeccable qualifications and experience running many different kinds of companies. Thus, the fourth principle most strongly implies that the company should hire a famous CEO.

The correct answer is A company will often see a quick rise in revenue immediately after hiring a CEO with experience in various industries.

RO2

As explained in the analysis of RO1, the first, third, and fifth principles do not favor one strategy over the other. The second principle implies that the company should continue its current strategy of hiring from within the company since that strategy has not been proven unsuccessful.

The correct answer is A company should not dispense with a current strategy unless that strategy has been proven to be unsuccessful.

Abhivas · Answer

Sir,
 chetan2u  
 GMATNinja 
in case of "promote from within" . I did not choose option B . because it has been mentioned that company wants to make a change to the old strategy of hiring CEO within the family. therefore i thought if company wants to make change why it will hold to old strategy.
I considerd both " famous CEO" and " Promote from within" (promote from existing employees not the family member) as new strategy.
Please explain it to me.
please also explain why option E is wrong in case of " Promote from within".
Regards

chetan2u · Answer

Promoting from within has been a successful strategy for  the company , yielding many of its most effective high-level managers

The above states that the company has been following ‘promote from within’. It nowhere sub classifies this in ‘from family’ and ‘from employees’. The members of that family too are employees.

Restrict to what has been asked.

Now E talks of alienation of employees. You have many real situations in politics or business where promoting someone from within leads to infighting and alienates some set of people most of the time. Alienation is not likely to favour one strategy over another unless some additional behaviour of the employees is known.

Sans8 · Answer

Here are my 2 cents,

Note what the question stem is saying  principle that, if accepted, would most strongly imply that the company should hire a Famous/Promote from within CEO

Now,
It means that combining the options with the premise of argument should strongly yield the conclusion to either support famous CEO or promoted from within CEO

2 Key points in premise are there:

1. The company wants to make a change in order to  generate revenue quickly , possibly by hiring a famous
CEO.

2.  Promoting from within has been a successful strategy for the company , yielding many of its most effective high-level managers

Let's check in the options:

Only option-  A company will often see a quick rise in revenue immediately after hiring a CEO with experience in various industries.  along with the premise pt 1 supports  famous CEO .

Only option-  A company should not dispense with a current strategy unless that strategy has proven to be unsuccessful.  along with premise pt2 supports  promote from within

As for last option about alienation: we don't know which CEO is going to create the feeling of alienation.

Key was understanding of question stem.
Hope it makes sense

MyNameisFritz · Answer

Hello!
What does  yielding  mean in "Promoting from within has been a successful strategy for the company,  yielding  many of its most effective high-level managers."?

nisen20 · Answer

Promoting from within has been a successful strategy for the company, producing many of its most effective high-level managers. https://www.oxfordlearnersdictionaries. ... sh/yield_2

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A growing company seeks a new CEO. The companywhich has always been

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Famous CEO	Promote from within
		CEOs have a responsibility to ensure that the companies they head remain profitable.
		A company should not dispense with a current strategy unless that strategy has proven to be unsuccessful.
		A company should choose as CEO the candidate who has the most experience in that company's specific industry.
		A company will often see a quick rise in revenue immediately after hiring a CEO with experience in various industries.
		When hiring a new CEO, a company needs to ensure that it does not alienate its employees in the process.

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