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GMAT Prep Question Pack 1 Main Idea Question

This topic has 1 expert reply and 1 member reply
richachampion Legendary Member
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GMAT Prep Question Pack 1 Main Idea Question

Post Tue Jul 25, 2017 9:58 pm
Elapsed Time: 00:00
  • Lap #[LAPCOUNT] ([LAPTIME])
    The modern multinational corporation is described as having originated when the owner-managers of nineteenth-century British firms carrying on international trade were replaced by teams of salaried managers organized into hierarchies. Increases in the volume of transactions in such firms are commonly believed to have necessitated this structural change. Nineteenth-century inventions like the steamship and the telegraph, by facilitating coordination of managerial activities, are described as key factors. Sixteenth- and seventeenth century chartered trading companies, despite the international scope of their activities, are usually considered irrelevant to this discussion: the volume of their transactions is assumed to have been too low and the communications and transport of their day too primitive to make comparisons with modern multinationals interesting.

    In reality, however, early trading companies successfully purchased and outfitted ships, built and operated offices and warehouses, manufactured trade goods for use abroad, maintained trading posts and production facilities overseas, procured goods for import, and sold those goods both at home and in other countries. The large volume of transactions associated with these activities seems to have necessitated hierarchical management structures well before the advent of modern communications and transportation. For example, in the Hudson's Bay Company, each far-flung trading outpost was managed by a salaried agent, who carried out the trade with the Native Americans, managed day-to-day operations, and oversaw the post's workers and servants. One chief agent, answerable to the Court of Directors in London through the correspondence committee, was appointed with control over all of the agents on the bay.

    The early trading companies did differ strikingly from modern multinationals in many respects. They depended heavily on the national governments of their home countries and thus characteristically acted abroad to promote national interests. Their top managers were typically owners with a substantial minority share, whereas senior managers' holdings in modern multinationals are usually insignificant. They operated in a pre-industrial world, grafting a system of capitalist international trade onto a pre-modern system of artisan and peasant production. Despite these differences, however, early trading companies organized effectively in remarkably modern ways and merit further study as analogs of more modern structures.

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    Post Wed Aug 02, 2017 10:33 am
    ... it looks like you neglected to post the question itself, and your queries about it.

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    richachampion Legendary Member
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    Post Sat Sep 02, 2017 1:46 am
    I am sorry this is the question:

    1. The author's main point is that

    (A) modern multinationals originated in the sixteenth and seventeenth centuries with the establishment of chartered trading companies
    (B) the success of early chartered trading companies, like that of modern multinationals, depended primarily on their ability to carry out complex operations
    (C) early chartered trading companies should be more seriously considered by scholars studying the origins of modern multinationals
    (D) scholars are quite mistaken concerning the origins of modern multinationals
    (E) the management structures of early chartered trading companies are fundamentally the same as those of modern multinationals

    I posted it a month ago so that I can request you to analyze based on one of your blog where you said when you have little time than thinking Like a lawyer and try eliminating the answers.

    Reference Link

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