Corporate Officer: Last year was an unusually poor.....

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S0laris: Master | Next Rank: 500 Posts; Posts: 131; Joined: Wed Feb 25, 2009 7:02 am; Location: Azerbaijan/Baku; Thanked: 2 times

by S0laris » Sat Mar 14, 2009 9:47 am

Corporate Officer: Last year was an unusually poor one for our chemical division, which has traditionally contributed about 60 percent of the corporation’s profits. It is therefore encouraging that there is the following evidence that the pharmaceutical division is growing stronger: it contributed 45 percent of the corporation’s profits, up from 20 percent the previous year.

On the basis of the facts stated, which of the following is the best critique of the evidence presented above?

(A) The increase in the pharmaceutical division’s contribution to corporation profits could have resulted largely from the introduction of single, important new product.
(B) In multidivisional corporations that have pharmaceutical divisions, over half of the corporation’s profits usually come from the pharmaceuticals.
(C) The percentage of the corporation’s profits attributable to the pharmaceutical division could have increased even if that division’s performance had not improved.
(D) The information cited does not make it possible to determine whether the 20 percent share of profits cited was itself an improvement over the year before.
(E) The information cited does not make it possible to compare the performance of the chemical and pharmaceutical divisions in of the percent of total profits attributable to each.

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Source: Beat The GMAT — Critical Reasoning | Sat Mar 14, 2009 9:47 am

hypik21: Senior | Next Rank: 100 Posts; Posts: 35; Joined: Wed Nov 05, 2008 11:33 pm; Thanked: 4 times

Re: Corporate Officer: Last year was an unusually poor.....

by hypik21 » Sat Mar 14, 2009 10:40 am

S0laris wrote:Corporate Officer: Last year was an unusually poor one for our chemical division, which has traditionally contributed about 60 percent of the corporation’s profits. It is therefore encouraging that there is the following evidence that the pharmaceutical division is growing stronger: it contributed 45 percent of the corporation’s profits, up from 20 percent the previous year.

On the basis of the facts stated, which of the following is the best critique of the evidence presented above?

(A) The increase in the pharmaceutical division’s contribution to corporation profits could have resulted largely from the introduction of single, important new product.
(B) In multidivisional corporations that have pharmaceutical divisions, over half of the corporation’s profits usually come from the pharmaceuticals.
(C) The percentage of the corporation’s profits attributable to the pharmaceutical division could have increased even if that division’s performance had not improved.
(D) The information cited does not make it possible to determine whether the 20 percent share of profits cited was itself an improvement over the year before.
(E) The information cited does not make it possible to compare the performance of the chemical and pharmaceutical divisions in of the percent of total profits attributable to each.

imo c..total company sales could have been less, but the sales of the pharma div. could be the same or even less than before, yet still take up a larger share of the new balance

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hypik21: Senior | Next Rank: 100 Posts; Posts: 35; Joined: Wed Nov 05, 2008 11:33 pm; Thanked: 4 times

Re: Corporate Officer: Last year was an unusually poor.....

by hypik21 » Sat Mar 14, 2009 10:40 am

S0laris wrote:Corporate Officer: Last year was an unusually poor one for our chemical division, which has traditionally contributed about 60 percent of the corporation’s profits. It is therefore encouraging that there is the following evidence that the pharmaceutical division is growing stronger: it contributed 45 percent of the corporation’s profits, up from 20 percent the previous year.

On the basis of the facts stated, which of the following is the best critique of the evidence presented above?

(A) The increase in the pharmaceutical division’s contribution to corporation profits could have resulted largely from the introduction of single, important new product.
(B) In multidivisional corporations that have pharmaceutical divisions, over half of the corporation’s profits usually come from the pharmaceuticals.
(C) The percentage of the corporation’s profits attributable to the pharmaceutical division could have increased even if that division’s performance had not improved.
(D) The information cited does not make it possible to determine whether the 20 percent share of profits cited was itself an improvement over the year before.
(E) The information cited does not make it possible to compare the performance of the chemical and pharmaceutical divisions in of the percent of total profits attributable to each.

imo c..total company sales could have been less, but the sales of the pharma div. could be the same or even less than before, yet still take up a larger share of the new balance

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nitya34: Master | Next Rank: 500 Posts; Posts: 179; Joined: Tue Jan 08, 2008 7:23 pm; Thanked: 11 times; GMAT Score:590

by nitya34 » Sat Mar 14, 2009 11:10 am

E-strengthening the argument

https://www.beatthegmat.com/corporate-of ... 25773.html

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delhiboy1979: Master | Next Rank: 500 Posts; Posts: 239; Joined: Wed Feb 11, 2009 2:50 am

by delhiboy1979 » Mon Mar 16, 2009 4:29 am

agree with C. If the entire pie is small a higher share does not necessarily mean more profit.

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Sharma_Gaurav: Master | Next Rank: 500 Posts; Posts: 160; Joined: Tue Jul 07, 2009 1:09 pmFollowed by: 1 member; Thanked: 1 times

by Sharma_Gaurav » Mon Jan 23, 2012 12:52 pm

I do not understand that why are we assuming here that the entire pie ( total company profit ) has declined. Where is this mentioned in the argument.
Everybody seems to be assuming the same thing.

Please any expert share your opinion?
Only if you assume above option C can be the answer.

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David@VeritasPrep: GMAT Instructor; Posts: 2193; Joined: Mon Feb 22, 2010 6:30 pmFollowed by: 512 members; Location: Vermont and Boston, MA; Thanked: 1186 times; GMAT Score:770

by David@VeritasPrep » Mon Jan 23, 2012 2:45 pm

OA is C.

Got a PM on this one...

This question seems to be adapted from an OG question where the chemical division is only 20 percent of the sales but is 40 percent of the profits. Perhaps you guys have seen that question in the OG?

As to this particular question, we are looking to weaken the conclusion. So what is the conclusion?
"It is therefore encouraging that there is the following evidence that the pharmaceutical division is growing stronger" In other words we are to conclude that the pharma division is growing stronger.

Okay, so what is the evidence? The evidence is that Pharma "contributed 45 percent of the corporation's profits, up from 20 percent the previous year."

Now when we are weakening one good way to state this is to say:

"Even though (insert the evidence) it is not necessarily true that (insert the conclusion)."

So in this case, "even though Pharma contributed 45 percent of the corporation's profits, up from 20 percent the previous year" it is not necessarily true that "the pharma division is growing stronger."

So the question is, how can Pharma account for more of the corporation's profits without actually having increased profits?

The way that this can happen is if the total profits of the entire corporation are down. delhiboy1979 and hypik21 mention that the entire pie might be smaller and therefore the Pharma profits might stay the same and yet be a larger percentage of a smaller pie.

Is there any support for this reasoning in the argument? yes! The first portion of the argument states, "Last year was an unusually poor one for our chemical division, which has traditionally contributed about 60 percent of the corporation's profits."

Aha! So the chemical division contributes the majority of the profits and that division has had an "unusually poor year." This leads to the very likely result that the overall profits of the company are in fact down.

Sharma_Gaurav I see what you mean when you ask where the decline of the total company profit is mentioned. I hope that the discussion of the chemical division shows that while the argument does not directly say that profits are down it certainly leads in that direction.

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ArunangsuSahu: Master | Next Rank: 500 Posts; Posts: 382; Joined: Thu Mar 31, 2011 5:47 pm; Thanked: 15 times

by ArunangsuSahu » Tue Jan 24, 2012 10:30 am

(C)

Conclusion is Pharmaceutical has improved..This may not be the case. If Chemical wen down and the total profit i less than the previous year the Pharmaceutical will have higher % of profits if it's total value contributing to the total Profit has not changed

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