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by imskpwr » Fri Sep 07, 2012 9:00 am
Sales of microwave ovens have increased considerably over the last year. In order to take advantage of this market trend, Hitek Appliances plans to increase production of its own model of microwave oven, while continuing its already extensive advertising of this product.

Which of the following, if true, provides most support for the view that Hitek Appliances cannot increase its sales of microwave ovens by adopting the plan outlined above?

Hitek Appliances's average inventory of microwave ovens awaiting shipment to retailers has dropped from 1,000 to 750 over the last year.

Market research shows that potential customers regard Hitek Appliances's microwave ovens to be high in quality.

Though Hitek Appliances's microwave ovens are priced comparably to those of its competition, sales of Hitek Appliances's microwave ovens have fallen in the last year.

Hitek Appliances's microwave oven is one of four brands of microwave oven that have together accounted for the majority of the last year's increase in sales.

Although it sells 95% of the microwave ovens that it produces, Hitek Appliances's share of all microwave oven sales has declined over the last year.
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by akashkumar1987 » Fri Sep 07, 2012 9:42 am
I think the answer is E option because overall market sales has increased but that of Hitek Appliances has decreased so by going that plan it cannot increase the sales.

Although it sells 95% of the microwave ovens that it produces, Hitek Appliances's share of all microwave oven sales has declined over the last year.
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by metallicafan » Fri Sep 07, 2012 10:59 am
+1 C

The sales of the ovens of the company are not experiencing the trend in the market. So, the company cannot expect that their sales will increase this year.

E cannot be the answer because although the share of market decreases, the sales can increase. For example, when the total sales of the market increase faster than the sales of the company.
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by GMATGuruNY » Sat Sep 08, 2012 5:29 am
imskpwr wrote:Sales of microwave ovens have increased considerably over the last year. In order to take advantage of this market trend, Hitek Appliances plans to increase production of its own model of microwave oven, while continuing its already extensive advertising of this product.

Which of the following, if true, provides most support for the view that Hitek Appliances cannot increase its sales of microwave ovens by adopting the plan outlined above?

Hitek Appliances's average inventory of microwave ovens awaiting shipment to retailers has dropped from 1,000 to 750 over the last year.

Market research shows that potential customers regard Hitek Appliances's microwave ovens to be high in quality.

Though Hitek Appliances's microwave ovens are priced comparably to those of its competition, sales of Hitek Appliances's microwave ovens have fallen in the last year.

Hitek Appliances's microwave oven is one of four brands of microwave oven that have together accounted for the majority of the last year's increase in sales.

Although it sells 95% of the microwave ovens that it produces, Hitek Appliances's share of all microwave oven sales has declined over the last year.
This CR exhibits a CHANGE IN SCOPE.
The premise is about OVERALL sales.
The conclusion is about HITEK'S sales.
To support the conclusion that Hitek's sales will not increase, the correct must answer BREAK THE LINK between HITEK'S sales and OVERALL sales.

Answer choice C: Though Hitek Appliances's microwave ovens are priced comparably to those of its competition, sales of Hitek Appliances's microwave ovens have fallen in the last year.
While OVERALL sales have INCREASED considerably in the last year, HITEK'S sales have FALLEN, breaking the link between OVERALL sales and HITEK'S sales and supporting the conclusion that Hitek will not improve its sales by increasing production of its ovens.

The correct answer is C.

Answer choice E: Although it sells 95% of the microwave ovens that it produces, Hitek Appliances's share of all microwave oven sales has declined over the last year.
Two years ago:
Total sales of microwaves = 100.
Hitek's market share = 90%, implying that 90 units were sold.

Last year:
Total sales of microwaves = 1,000,000.
Hitek's market share = 50%, implying that 500,000 units were sold.

Even though Hitek's market share DECREASED, its sales INCREASED -- WEAKENING the conclusion that Hitek cannot increase its sales further by producing more units.
Eliminate E.
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by imskpwr » Sat Sep 08, 2012 6:40 am
GMATGuruNY wrote:
This CR exhibits a CHANGE IN SCOPE.
The premise is about OVERALL sales.
The conclusion is about HITEK'S sales.
To support the conclusion that Hitek's sales will not increase, the correct must answer BREAK THE LINK between HITEK'S sales and OVERALL sales.

Answer choice C: Though Hitek Appliances's microwave ovens are priced comparably to those of its competition, sales of Hitek Appliances's microwave ovens have fallen in the last year.
While OVERALL sales have INCREASED considerably in the last year, HITEK'S sales have FALLEN, breaking the link between OVERALL sales and HITEK'S sales and supporting the conclusion that Hitek will not improve its sales by increasing production of its ovens.

The correct answer is C.

Answer choice E: Although it sells 95% of the microwave ovens that it produces, Hitek Appliances's share of all microwave oven sales has declined over the last year.
Two years ago:
Total sales of microwaves = 100.
Hitek's market share = 90%, implying that 90 units were sold.

Last year:
Total sales of microwaves = 1,000,000.
Hitek's market share = 50%, implying that 500,000 units were sold.

Even though Hitek's market share DECREASED, its sales INCREASED -- WEAKENING the conclusion that Hitek cannot increase its sales further by producing more units.
Eliminate E.
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