Outsourcing is the practice of obtaining from an independent supplier a product or service that a company has previously provided for itself. Vernon, Inc., a small manufacturing company that has in recent years experienced a decline in its profits, plans to boost its profits by outsourcing those parts of its business that independent suppliers can provide at lower cost than Vernon can itself.
Which of the following, if true, most strongly supports the prediction that Vernon's plan will achieve its goal?
(A) Among the parts of its business that Vernon does not plan to outsource are some that require standards of accuracy too high for most independent suppliers to provide at lower cost than Vernon can.
(B) Vernon itself acts as an independent supplier of specialized hardware items to certain manufacturers that formerly made those items themselves.
(C) Relatively few manufacturers that start as independent suppliers have been able to expand their business and become direct competitors of the companies they once supplied.
(D) Vernon plans to select the independent suppliers it will use on the basis of submitted bids.
(E) Attending to certain tasks that Vernon performs relatively inefficiently has taken up much of the time and effort of top managers whose time would have been better spent attending to Vernon's core business.
OA is E. While I think C is more approprate. After all, the goal of the company is to increase its profit. If the independent suppliers became the competitors, the market share of the company would possibly be shrinked. As for E, the fact that top managers have more time to care about the core business will not necessarily increase the profit, because there are other factors that also determine the profit gains.
Discussion needed:)
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yangliu0401
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4seasoncentre
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This makes good business sense, but doesn't support the argument that outsourcing will boost profits(A) Among the parts of its business that Vernon does not plan to outsource are some that require standards of accuracy too high for most independent suppliers to provide at lower cost than Vernon can.
That's interesting, but not relevant.(B) Vernon itself acts as an independent supplier of specialized hardware items to certain manufacturers that formerly made those items themselves.
While this is an indication that the company probably won't be competing against its current suppliers, it doesn't explicitly help us determine whether profits will be boosted.(C) Relatively few manufacturers that start as independent suppliers have been able to expand their business and become direct competitors of the companies they once supplied.
This makes good business sense, but we don't necessarily know if the submitted bids are at competitive prices which would boost profits.(D) Vernon plans to select the independent suppliers it will use on the basis of submitted bids.
From this statement we can tell that there are tasks Vernon does inefficiently. It implies that an outside supplier would be more efficient and that could help boost profits. That's not concrete enough, but it goes on to explain that management time could be used more efficiently, which also implies that it will result in higher profits.(E) Attending to certain tasks that Vernon performs relatively inefficiently has taken up much of the time and effort of top managers whose time would have been better spent attending to Vernon's core business.
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yangliu0401
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Well, if C were an indication, E would be another indication(managers can have more time then have bigger possibility to make the decision that would increase the profit). Actually this is what I can not understand: which one is more appropriate? Can anybody expalin the logic? Million thx!!!!4seasoncentre wrote:[.
While this is an indication that the company probably won't be competing against its current suppliers, it doesn't explicitly help us determine whether profits will be boosted.(C) Relatively few manufacturers that start as independent suppliers have been able to expand their business and become direct competitors of the companies they once supplied.
From this statement we can tell that there are tasks Vernon does inefficiently. It implies that an outside supplier would be more efficient and that could help boost profits. That's not concrete enough, but it goes on to explain that management time could be used more efficiently, which also implies that it will result in higher profits.(E) Attending to certain tasks that Vernon performs relatively inefficiently has taken up much of the time and effort of top managers whose time would have been better spent attending to Vernon's core business.
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yangliu0401
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yangliu0401 wrote:Well, if C were an indication, E would be another indication(having more time means having bigger possibility to make the decision that would increase the profit). Actually this is what I can not understand: which one is more appropriate? Can anybody expalin the logic? Million thx!!!!4seasoncentre wrote:[.
While this is an indication that the company probably won't be competing against its current suppliers, it doesn't explicitly help us determine whether profits will be boosted.(C) Relatively few manufacturers that start as independent suppliers have been able to expand their business and become direct competitors of the companies they once supplied.
From this statement we can tell that there are tasks Vernon does inefficiently. It implies that an outside supplier would be more efficient and that could help boost profits. That's not concrete enough, but it goes on to explain that management time could be used more efficiently, which also implies that it will result in higher profits.(E) Attending to certain tasks that Vernon performs relatively inefficiently has taken up much of the time and effort of top managers whose time would have been better spent attending to Vernon's core business.
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4seasoncentre
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Yeah, I understand it can be confusing.
They are asking whether profits will go up or not due to outsourcing. For C:
Outsource --> unlikely to have competition --> revenues will not be effected --> profits will remain ok
for E
Outsource --> save costs --> increase profits
so for me, E is much more direct....
I dunno if that helps.
They are asking whether profits will go up or not due to outsourcing. For C:
Outsource --> unlikely to have competition --> revenues will not be effected --> profits will remain ok
for E
Outsource --> save costs --> increase profits
so for me, E is much more direct....
I dunno if that helps.
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yangliu0401
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ur~~~~ E has no information about the cost saving lah~~~ it just indicates that top managers' time would be spent more on the core business, then there will be more possibility of increasing profit. This point just has the same effect with choice C. So I still have doubt4seasoncentre wrote:Yeah, I understand it can be confusing.
They are asking whether profits will go up or not due to outsourcing. For C:
Outsource --> unlikely to have competition --> revenues will not be effected --> profits will remain ok
for E
Outsource --> save costs --> increase profits
so for me, E is much more direct....
I dunno if that helps.
But thx anyway.Eagerly need further discussion!!!
