Reading Comprehension

In the decades following World War II, American business had
undisputed control of the world economy, producing goods of such high
quality and low cost that foreign corporations were unable to compete.
But in the mid-1960s the United States began to lose its advantage and
by the 1980s American corporations lagged behind the competition in
many industries. In the computer chip industry, for example, American
corporations had lost most of both domestic and foreign markets by the
early 1980s.
The first analysts to examine the decline of American business blamed
the U.S. government. They argued that stringent governmental
restrictions on the behaviour of American corporations, combined with
the wholehearted support given to foreign firms by their governments,
created and environment in which American products could not
compete. Later analysts blamed predatory corporate raiders who bought
corporations, not to make them more competitive in the face of foreign
competition, but rather to sell off the most lucrative divisions for huge
profits.
Still later analysts blamed the American workforce, citing labour
demands and poor productivity as the reasons American corporations
have been unable to compete with Japanese and European firms.
Finally, a few analysts even censured American consumers for their
unpatriotic purchases of foreign goods. The blame actually lies with
corporate management, which has made serious errors based on
misconceptions about what it takes to be successful in the marketplace.
These missteps involve labour costs, production choices, and growth
strategies.
Even though labour costs typically account for less than 15% of a
product's total cost, management has been quick to blame the costs of
workers' wages for driving up prices, making American goods
uncompetitive. As a result of attempts to minimize the cost of wages,
American corporations have had trouble recruiting and retaining skilled
workers.
The emphasis on cost minimization has also led to another blunder: an
over-concentration on high technology products. Many foreign firms
began by specializing in the mass production and sale of low technology
products, gaining valuable experience and earning tremendous profits.
Later, these corporations were able to break into high technology
markets without much trouble; they simply applied their previous
manufacturing experience and ample financial resources to the
production of higher quality goods. American business has consistently
ignored this very sensible approach.
The recent rash of corporate mergers and acquisitions in the U.S. has
not helped the situation either. While American firms have neglected
long-range planning and production, preferring instead to reap fast
profits through mergers and acquisitions, foreign firms have been quick
to exploit opportunities to ensure their domination over future markets
by investing in the streamlining and modernization of their facilities.


The author of this passage would probably give his greatest support to which
of the following actions by the corporate management of an American
company?
A. Acquiring a smaller company in order to gain financial resources
B. Considering the option of paying the most highly skilled workers a
higher wage
C. Trying to learn from the general management strategy of foreign firms
D. Paying for television advertisements that will win back American
consumers
E. Flooding foreign markets with cheap goods

crimson2283 wrote:In the decades following World War II, American business had
undisputed control of the world economy, producing goods of such high
quality and low cost that foreign corporations were unable to compete.
But in the mid-1960s the United States began to lose its advantage and
by the 1980s American corporations lagged behind the competition in
many industries. In the computer chip industry, for example, American
corporations had lost most of both domestic and foreign markets by the
early 1980s.
The first analysts to examine the decline of American business blamed
the U.S. government. They argued that stringent governmental
restrictions on the behaviour of American corporations, combined with
the wholehearted support given to foreign firms by their governments,
created and environment in which American products could not
compete. Later analysts blamed predatory corporate raiders who bought
corporations, not to make them more competitive in the face of foreign
competition, but rather to sell off the most lucrative divisions for huge
profits.
Still later analysts blamed the American workforce, citing labour
demands and poor productivity as the reasons American corporations
have been unable to compete with Japanese and European firms.
Finally, a few analysts even censured American consumers for their
unpatriotic purchases of foreign goods. The blame actually lies with
corporate management, which has made serious errors based on
misconceptions about what it takes to be successful in the marketplace.
These missteps involve labour costs, production choices, and growth
strategies.
Even though labour costs typically account for less than 15% of a
product's total cost, management has been quick to blame the costs of
workers' wages for driving up prices, making American goods
uncompetitive. As a result of attempts to minimize the cost of wages,
American corporations have had trouble recruiting and retaining skilled
workers.
The emphasis on cost minimization has also led to another blunder: an
over-concentration on high technology products. Many foreign firms
began by specializing in the mass production and sale of low technology
products, gaining valuable experience and earning tremendous profits.
Later, these corporations were able to break into high technology
markets without much trouble; they simply applied their previous
manufacturing experience and ample financial resources to the
production of higher quality goods. American business has consistently
ignored this very sensible approach.
The recent rash of corporate mergers and acquisitions in the U.S. has
not helped the situation either. While American firms have neglected
long-range planning and production, preferring instead to reap fast
profits through mergers and acquisitions, foreign firms have been quick
to exploit opportunities to ensure their domination over future markets
by investing in the streamlining and modernization of their facilities.


The author of this passage would probably give his greatest support to which
of the following actions by the corporate management of an American
company?
A. Acquiring a smaller company in order to gain financial resources
B. Considering the option of paying the most highly skilled workers a
higher wage
C. Trying to learn from the general management strategy of foreign firms
D. Paying for television advertisements that will win back American
consumers
E. Flooding foreign markets with cheap goods

I believe the answer is [spoiler]B - lower labor costs is listed as an error by management that has led to trouble recruiting and retaining skilled workers. [/spoiler]

I chose B too. The answer is C.

I think B is incorrect because while the passage does state that paying overall low wages is a bad idea it never says anything about wage differential between different groups of workers. Hence option B is out of scope.

I would go with C because even though the author does not mention this explicitly he does consider foreign management to be more efficient than American management (para 5).

[quote="crimson2283"]In the decades following World War II, American business had
undisputed control of the world economy, producing goods of such high
quality and low cost that foreign corporations were unable to compete.
But in the mid-1960s the United States began to lose its advantage and
by the 1980s American corporations lagged behind the competition in
many industries. In the computer chip industry, for example, American
corporations had lost most of both domestic and foreign markets by the
early 1980s.
The first analysts to examine the decline of American business blamed
the U.S. government. They argued that stringent governmental
restrictions on the behaviour of American corporations, combined with
the wholehearted support given to foreign firms by their governments,
created and environment in which American products could not
compete. Later analysts blamed predatory corporate raiders who bought
corporations, not to make them more competitive in the face of foreign
competition, but rather to sell off the most lucrative divisions for huge
profits.
Still later analysts blamed the American workforce, citing labour
demands and poor productivity as the reasons American corporations
have been unable to compete with Japanese and European firms.
Finally, a few analysts even censured American consumers for their
unpatriotic purchases of foreign goods. The blame actually lies with
corporate management, which has made serious errors based on
misconceptions about what it takes to be successful in the marketplace.
These missteps involve labour costs, production choices, and growth
strategies.
Even though labour costs typically account for less than 15% of a
product's total cost, management has been quick to blame the costs of
workers' wages for driving up prices, making American goods
uncompetitive. As a result of attempts to minimize the cost of wages,
American corporations have had trouble recruiting and retaining skilled
workers.
The emphasis on cost minimization has also led to another blunder: an
over-concentration on high technology products. Many foreign firms
began by specializing in the mass production and sale of low technology
products, gaining valuable experience and earning tremendous profits.
Later, these corporations were able to break into high technology
markets without much trouble; they simply applied their previous
manufacturing experience and ample financial resources to the
production of higher quality goods. [b]American business has consistently
ignored this very sensible approach[/b].
The recent rash of corporate mergers and acquisitions in the U.S. has
not helped the situation either. While American firms have neglected
long-range planning and production, preferring instead to reap fast
profits through mergers and acquisitions, foreign firms have been quick
to exploit opportunities to ensure their domination over future markets
by investing in the streamlining and modernization of their facilities.


The author of this passage would probably give his greatest support to which
of the following actions by the corporate management of an American
company?
A. Acquiring a smaller company in order to gain financial resources
B. Considering the option of paying the most highly skilled workers a
higher wage
C. Trying to learn from the general management strategy of foreign firms
D. Paying for television advertisements that will win back American
consumers
E. Flooding foreign markets with cheap goods[/quote]

American business has consistently
ignored this very sensible approach

Probably the bolded portion explains why the answer is c

crimson2283 wrote:I chose B too. The answer is C.

Thanks Crimson, I also chose B. That's messed up. Would you mind sharing the source for this question?

Source is RC 99.

Its a good question though the passage was rather easy I must say. Here's my reasoning:

A - 'Financial resources' is Out of scope
B - 'Skill sets' Out of scope
C - The Correct Answer
D - No connection to the passage
E - The Chinese way but no connection to the passage

The key phrase is this:

The blame actually lies with corporate management, which has made serious errors based on
misconceptions about what it takes to be successful in the marketplace. These missteps involve labour costs, production choices, and growth strategies.

(A) Acquiring a smaller company in order to gain financial resources

In the passage it states that analysts blamed predatory corporate raiders who bought
corporations, not to make them more competitive. Author states the recent rash of corporate mergers and acquisitions in the U.S. has not helped the situation either. Don't cross off yet.


(B) Considering the option of paying the most highly skilled workers a higher wage

Author states, "These missteps involve labour costs, production choices, and growth
strategies.........As a result of attempts to minimize the cost of wages, American corporations have had trouble recruiting and retaining skilled workers." We'll keep this one.

(C) Trying to learn from the general management strategy of foreign firms

This touches on the key point the author is trying to make, "The blame actually lies with corporate management, which has made serious errors based on misconceptions about what it takes to be successful in the marketplace. These missteps involve labour costs, production choices, and growth strategies." This choice is better than A or B, so we can cross both of them off.

(D) Paying for television advertisements that will win back American consumers

Passage never states correlation between television ads and American consumers. We can eliminate this choice.


(E) Flooding foreign markets with cheap goods

We're never told anything about flooding foreign markets with cheap goods and the effects of the strategy.

I chose C over B.

B. Considering the option of paying the most highly skilled workers a
higher wage ---> Paying only the MOST highly skilled workers a higher wage is not the best solution. The issue is about retention of skilled workers and not only the most skilled ones.

C. Trying to learn from the general management strategy of foreign firms --> Initially had doubt over the word "general management" because the scope, IMO, is widened with the usage of such a phrase - However when I managed to negate C, this was the best option left.

The others, namely D & E were out of scope. A, IMO, was against the mindset of the author - acquisitions.

At the first instance I will choose (B)
justify (C) please

Only contenders are B & C. Here is my explanation.

Regaring B. Considering the option of paying the most highly skilled workers a higher wage,
Passage never mentions about higher wage for highly skilled workers.
It Deals with the wages of all workers.

So, B is too extreme to be inferred from Passage.

Regarding C. Trying to learn from the general management strategy of foreign firms,
Passage emphasizes on the point, "American business has consistently ignored this very sensible approach.", which clearly says author supports the way of foreign firms and would most likely favour US companies to follow this approach.

Hope that helps..

Wow This question lies on the author' Implication: American corporation should study the general management of foreign firms to be more efficient. The answer is clear now,I have hard time to decide among answers A B C,
D and E are out of league because the author never mentions about market flooding and advertisement. Answer c is stronger than answer B and A. First, I chose A since the American corporation cold acquire small firm to reap the quick profits. Then foreign corporation exploit that opportunity as well. I should signal the hint thatamerican corporation should study from foreigner corporation. Thanks. Tough one.
Answer B, author blames on the American productivity rather than the lower pay. Should eliminate it

I would go for C. In my opinion, the author believes that the business strategy and philosophy of the foriegn firms are better, than American firms, who have not exploited the first mover advantage in various industries.

Club, I am confused as to what the question is asking

The author of this passage would probably give his greatest support to which
of the following actions by the corporate management of an American
company?

Is the question asking - what would the author most likely agree to the behavior of the American corporate management, or, what would the author recommend to the corporate management?


Please shed some light on it. [/u]