Modern manufacturers, who need reliable sources of materials and technologically advanced
components to operate profitably, face an increasingly difficult choice between owning the
producers of these items (a practice known as backward integration) and buying from independent
producers. Manufacturers who integrate may reap short-term rewards, but they often restrict their
future capacity for innovative product development.
Backward integration removes the need for some purchasing and marketing functions, centralizers
overhead, and permits manufacturers to eliminate duplicated efforts in research and development.
Where components are commodities (ferrous metals or petroleum, for example), backward
integration almost certainly boosts profits. Nevertheless, because product innovation means
adopting the most technologically advanced and cost-effective ways of making components,
backward integration may entail a serious risk for a technologically active company-for example,
a producer of sophisticated consumer electronics.
A company that decides to make rather than buy important parts can lock itself into an outdated
technology. Independent suppliers may be unwilling to share innovations with assemblers with
whom they are competing. Moreover, when an assembler sets out to master the technology of
producing advanced components, the resulting demands on its resources may compromise its
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ability to assemble these components successfully into end products. Long-term contracts with
suppliers can achieve many of the same cost benefits as backward integration without
compromising a company's ability to innovate.
However, moving away from backward integration is not a complete solution either. Developing
innovative technologies requires independent suppliers of components to invest huge sums in
research and development. The resulting low profit margins on the sale of components threaten the
long-term financial stability of these firms. Because the ability of end-product assemblers to
respond to market opportunities depends heavily on suppliers of components, assemblers are often
forced to integrate by purchasing the suppliers of components just to keep their suppliers in
business.
Which of the following best describes the way the last paragraph functions in the context of
the passage?
(A) The last in a series of arguments supporting the central argument of the passage is
presented.
(B) A viewpoint is presented which qualifies one presented earlier in the passage.
(C) Evidence is presented in support of the argument developed in the preceding paragrap.
(D) Questions arising from the earlier discussion are identified as points of departure for further
study of the topic.
(E) A specific example is presented to illustrate the main elements of argument presented in
the earlier paragraphs.
Easy Question , Confusing Options
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- vikram4689
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- vikram4689
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Modern manufacturers, who need reliable sources of materials and technologically advanced components to operate profitably, face an increasingly difficult choice between owning the producers of these items (a practice known as backward integration) and buying from independent producers. Manufacturers who integrate may reap short-term rewards, but they often restrict their future capacity for innovative product development.
Backward integration removes the need for some purchasing and marketing functions, centralizers overhead, and permits manufacturers to eliminate duplicated efforts in research and development. Where components are commodities (ferrous metals or petroleum, for example), backward integration almost certainly boosts profits. Nevertheless, because product innovation means adopting the most technologically advanced and cost-effective ways of making components, backward integration may entail a serious risk for a technologically active company-for example, a producer of sophisticated consumer electronics.
A company that decides to make rather than buy important parts can lock itself into an outdated technology. Independent suppliers may be unwilling to share innovations with assemblers with whom they are competing. Moreover, when an assembler sets out to master the technology of producing advanced components, the resulting demands on its resources may compromise its ability to assemble these components successfully into end products. Long-term contracts with suppliers can achieve many of the same cost benefits as backward integration without compromising a company's ability to innovate.
However, moving away from backward integration is not a complete solution either. Developing innovative technologies requires independent suppliers of components to invest huge sums in research and development. The resulting low profit margins on the sale of components threaten the long-term financial stability of these firms. Because the ability of end-product assemblers to respond to market opportunities depends heavily on suppliers of components, assemblers are often forced to integrate by purchasing the suppliers of components just to keep their suppliers in business.
Backward integration removes the need for some purchasing and marketing functions, centralizers overhead, and permits manufacturers to eliminate duplicated efforts in research and development. Where components are commodities (ferrous metals or petroleum, for example), backward integration almost certainly boosts profits. Nevertheless, because product innovation means adopting the most technologically advanced and cost-effective ways of making components, backward integration may entail a serious risk for a technologically active company-for example, a producer of sophisticated consumer electronics.
A company that decides to make rather than buy important parts can lock itself into an outdated technology. Independent suppliers may be unwilling to share innovations with assemblers with whom they are competing. Moreover, when an assembler sets out to master the technology of producing advanced components, the resulting demands on its resources may compromise its ability to assemble these components successfully into end products. Long-term contracts with suppliers can achieve many of the same cost benefits as backward integration without compromising a company's ability to innovate.
However, moving away from backward integration is not a complete solution either. Developing innovative technologies requires independent suppliers of components to invest huge sums in research and development. The resulting low profit margins on the sale of components threaten the long-term financial stability of these firms. Because the ability of end-product assemblers to respond to market opportunities depends heavily on suppliers of components, assemblers are often forced to integrate by purchasing the suppliers of components just to keep their suppliers in business.
- vikram4689
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Yes it is B, what i fail to understand is how the paragraph "quallify" the viewpoint in the preceding paragraph. Both of them are opposite and qualify means "to become eligible for something"
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para 2 says "Backward integration removes the need for some purchasing and marketing functions, centralizers overhead, and permits manufacturers to eliminate duplicated efforts in research and development"
last para: "However, moving away from backward integration is not a complete solution either. Developing innovative technologies requires independent suppliers of components to invest huge sums in research and development. The resulting low profit margins on the sale of components threaten the long-term financial stability of these firms."
if u read both the above option B shud be clear.
option B only says it discusses a point presented earlier in the passage (NOT in PARAGRAPH)
hope its clear.
last para: "However, moving away from backward integration is not a complete solution either. Developing innovative technologies requires independent suppliers of components to invest huge sums in research and development. The resulting low profit margins on the sale of components threaten the long-term financial stability of these firms."
if u read both the above option B shud be clear.
option B only says it discusses a point presented earlier in the passage (NOT in PARAGRAPH)
hope its clear.
vikram4689 wrote:Yes it is B, what i fail to understand is how the paragraph "quallify" the viewpoint in the preceding paragraph. Both of them are opposite and qualify means "to become eligible for something"
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Go by process of elimination , other options talks about evidence , question and specific example in C , D , E respectively so they are out .vikram4689 wrote:Yes it is B, what i fail to understand is how the paragraph "quallify" the viewpoint in the preceding paragraph. Both of them are opposite and qualify means "to become eligible for something"
Left with A and B , A is not supporting the central argument .
B , yes the para does tell about a viewpoint.
Thanks & Regards,
AIM GMAT
AIM GMAT
- vikram4689
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@ rohu27 : got it,
@AIM : central arg is that : we cannot decide which one is better. But last para ,even though does not favour any one approach, does not empahsize that we cannot take a stand. Is this the reason
@AIM : central arg is that : we cannot decide which one is better. But last para ,even though does not favour any one approach, does not empahsize that we cannot take a stand. Is this the reason
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Para 2 and last para talks about the same thing , hence i went ahead for B and not A , anyways the last para also starts with a contarst word "however" , that also inclined me towards B .
I am no expert , these are just my take on question , might not be absolutely correct .
I am no expert , these are just my take on question , might not be absolutely correct .
Thanks & Regards,
AIM GMAT
AIM GMAT