modern multi -nationals v/s early trading companies

[bhumika.k.shah]

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.

241. 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 opertions
(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

242. According to the passage, early chartered trading companies are usually described as

(A) irrelevant to a discussion of the origins of the modern multinational corporation
(B) interesting but ultimately too unusually to be good subjects for economic study
(C) analogues of nineteenth-century British trading firms
(D) rudimentary and very early forms of the modern multinational corporation
(E) important national institutions because they existed to further the political aims of the
governments of their home countries

243. It can be inferred from the passage that the author would characterize the activities engaged
in by early chartered trading companies as being

(A) complex enough in scope to requrie a substantial amount of planning and coordination on
the part of management
(B) too simple to be considered similar to those of a modern multinational corporation
(C) as intricate as those carried out by the largest multinational corporations today
(D) often unprofitable due to slow communications and unreliable means of transportation
(E) hampered by the political demands imposed on them by the governments of their home
countries

244. The author lists the various activities of early chartered trading companies in order to

(A) analyze the various ways in which these activities contributed to changes in managemnt
structure in such companies
(B) demonstrate that the volume of business transactions of such companies exceeded that of
exceeded that of earlier firms
(C) refute the view that the volume of business undertaken by such companies was relatively
low
(D) emphasize the international scope of these companies' operations
(E) support the argument that such firms coordinated such activities by using available means
of communication and transport

How do u know the author's point of view from a passage like this one ?

@ what difficulty would a passage like this one be in GMAT ? whats its range ?

Hope this passage isnt already posted before. Have searched for it before posting but couldnt find anything as such.

[raisethebar]

I guess passage is of mediam complexity.


IMO
Confused between E and A
e
e
a

Let me know OA

[mgmt_gmat]

IMO

E

D

A..


Let us know the OA.

[Osirus@VeritasPrep]

241) C (Despite these differences, however, early trading companies organized effectively in remarkably modern ways and merit further study as analogues of more modern structures. )
242) A (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)
243) A
244) C (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. )


I would probably say that's a 600 level passage.

[pnk]

My ans: C, D (close reading it appears sud hv been A....but why not D need some discussion), A, C

[bhumika.k.shah]

241 . C

This question asks you to identify the author's main point in the passage. The best answer is C. In
the first paragraph, the author states that early chartered trading companies are usually not
considered to be precursors of the modern multinational corporation. In the second paragraph,
however, the author goes on to discuss similarities between early chartered trading companies and
the modern multinational corporation. At the end of the passage the author asserts that early
chartered trading companies "merit further study as analogues of more modern structures." Choice
A is incorrect

242. A

This question asks you to identify a typical characterization of early chartered trading companies
that is mentioned in the passage. The best answer is A. Lines 10-13 of the passage state that early
chartered trading companies are not usually considered relevant to the discussion of the origin of
the modern multinational corporation. Choices B and E are incorrect because the passage does not
indicate that early chartered trading companies are considered unusual nor does it indicate that
their importance is considered to stem from their furthering of political aims. Choices C and D are
incorrect because the first paragraph of the passage indicates that nineteenth-century British
trading firms, but not early chartered trading companies, are described as having originated the
modern multinational.

[bhumika.k.shah]

243. A

This question asks you to draw an inference about how the author of the passage would describe
the activities engaged in by early chartered trading companies. The best answer is A. The first
sentence of the second paragraph of the passage outlines the activities of early trading companies.
The author then goes on to say that the "large volume of transactions associated with these
activities seems to have necessitated hierarchical management structures." The last two sentences
of the second paragraph provide an example of the activity required to manage the work of early
chartered trading companies. Thus it can be inferred from the passage that the author would agree
that the activities of early chartered trading companies were complex enough to require a high
level of planning on the part of management. Both B and C misrepresent the author's description
of the activities engaged in by early chartered trading companies. The author suggests that the
activities are fairly complex and in some ways similar to those of a modern multinational
corporation, but does not indicate how the activities compare in complexity with those carried out
by the largest multinational corporations today. Choice D is incorrect: lines 18-24 of the passage
indicate that early chartered trading companies were successful. Choice E is incorrect: although
the author of the passage indicates that early chartered trading companies depended heavily on
their national governments, the author does not suggest that such companies were hampered by
their governments' political demands.

244. C

This question asks you to identify the function served by the author's listing the various activities
of early chartered trading companies. The best answer is C. In the last sentence of the first
paragraph of the passage, the author states that the volume of early chartered trading companies'
transactions is usually assumed to have been low. The author then contradicts this view in the
second paragraph by listing many different kinds of trade-related activities undertaken by trading
companies that indicate a significant volume of business. Thus the author's list serves to refute the
belief that the volume of early chartered trading companies' transactions was relatively low.
Choice A is incorrect because the passage indicates that the nature of the various transactions
engaged in by early chartered trading companies required a complex management structure, but
the author's listing of activities does not indicate ways in which the management structure
changed. Choices B, D, and E can be eliminated: the list of examples of the various activities
engaged in by early chartered trading companies does not follow a statement about the
international scope of these companies or a comparison with the activities of earlier firms, and it is
not offered in support of an argument about how chartered trading companies used available
means of communication and transport.

Hope this helps

[iamcste]

thanks bhumika!

[frank1]

243. A

Choice E is incorrect: although
the author of the passage indicates that early chartered trading companies depended heavily on
their national governments, the author does not suggest that such companies were hampered by
their governments' political demands.

244. C

See this lines
They depended heavily on the national governments of their home countries and thus characteristically acted abroad to promote national interests.
What can be infer from here
how is this incorrect?
they were hampered by the political demands imposed on them by the governments of their home countries

They have to heavily depend on local goverment means they were hampered