Reading Comprehension

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 analogues of more modern structures.


1. The author's main point is that
(A) modern multinationals originated in the sixtenth 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

Please explain your pick.

sam2304 wrote: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 analogues of more modern structures.


1. The author's main point is that
(A) modern multinationals originated in the sixtenth 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

Please explain your pick.

My pick option (E)

Because second paragraph has a mention in it about hierarchial structures wrt 'Modern Multinations (subtle reference ?)

But third paragraph says they were strikingly different! Should I assume that mention about 'Early Chartered Companies' is purely to deceive? Whereas second paragraph is extensively about those companies?

Hi,
Here is my analysis:

P1: Talks about Modern Multinational corporation and said that there should not be any comparison with old Trading companies.
P2: Provides an analogy between old and new companies.
P3: Although provides contrast between old and new companies. But concludes that both are analogous.

Even if we don't summerize the passage. Last 2 lines talks about the theme only:

Despite these differences, however, early trading companies organized effectively in remarkably modern ways and merit further study as analogues of more modern structures.

A tough choice between C and E.
(C) early chartered trading companies should be more seriously considered by scholars studying the origins of modern multinationals
(E) the management structures of early chartered trading companies are fundamentally the same as those of modern multinationals

I will go for C. The author says the study is analogous because of organization. The managerial structure was different.

Their top managers were typically owners with a substantial minority share, whereas senior managers' holdings in modern multinationals are usually insignificant.

Also, If we discuss each option individually:

(A) modern multinationals originated in the sixtenth and seventeenth centuries with the establishment of chartered trading companies
Too narrow. Only 1st para talks about it.

(B) the success of early chartered trading companies, like that of modern multinationals, depended primarily on their ability to carry out complex operations
Too narrow. 2nd para talks about it.

(D) scholars are quite mistaken concerning the origins of modern multinationals
Out of scope.


Really a tough question. I chosed E on 1st instance.

P1: How and when modern multinational corporation originated; Factors responsible

P2: Refute last factor (insignificance of charted trading companies)

P3: Moden MNC and trading companies not similar; Trading companies organized effectively as modern MNCs do; merit further study as analogues of more modern structures (last line of para is KEY)

Focus/Main of passg: similarity of moden MNC with trading companies - further study required

1. The author's main point is that

(A) modern multinationals originated in the sixtenth and seventeenth centuries with the establishment of chartered trading companies

Nowhere in pssg says clearly that moden MNCs originatd in 16-17c; Its not the main argument of pssg; Author is interested not in declaring when moden MNCs were generated but rather ...its similarity with 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

Focus of this option is trading companies; Author's focus is modern MNCs; Nowhere close

(C) early chartered trading companies should be more seriously considered by scholars studying the origins of modern multinationals

This is it; Author mentions factors in P1 and refute the insignificance of trading companies in P2 ..to show the importance of trading companies while studying the modern companies. The last line of pssg actually shows author's intent..and all points mentioned in previous para are just stories to come to this conclusion

(D) scholars are quite mistaken concerning the origins of modern multinationals

Author does not make any harsh comment about scholars (quite mistaken - too harsh);

(E) the management structures of early chartered trading companies are fundamentally the same as those of modern multinationals

author is interested in modern MNCs in general not their management structure in particular

IMO C

OA C.

No other option seems good, if we use POE we can narrow down only to C. That being said, the main point seems to be more closely related to the last paragraph of the passage especially last line where as it should cover the whole passage. Does anybody think of it the same way ?