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crimson2283
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In the decades following World War II, American business had
undisputed control of the world economy, producing goods of such high
quality and low cost that foreign corporations were unable to compete.
But in the mid-1960s the United States began to lose its advantage and
by the 1980s American corporations lagged behind the competition in
many industries. In the computer chip industry, for example, American
corporations had lost most of both domestic and foreign markets by the
early 1980s.
The first analysts to examine the decline of American business blamed
the U.S. government. They argued that stringent governmental
restrictions on the behaviour of American corporations, combined with
the wholehearted support given to foreign firms by their governments,
created and environment in which American products could not
compete. Later analysts blamed predatory corporate raiders who bought
corporations, not to make them more competitive in the face of foreign
competition, but rather to sell off the most lucrative divisions for huge
profits.
Still later analysts blamed the American workforce, citing labour
demands and poor productivity as the reasons American corporations
have been unable to compete with Japanese and European firms.
Finally, a few analysts even censured American consumers for their
unpatriotic purchases of foreign goods. The blame actually lies with
corporate management, which has made serious errors based on
misconceptions about what it takes to be successful in the marketplace.
These missteps involve labour costs, production choices, and growth
strategies.
Even though labour costs typically account for less than 15% of a
product's total cost, management has been quick to blame the costs of
workers' wages for driving up prices, making American goods
uncompetitive. As a result of attempts to minimize the cost of wages,
American corporations have had trouble recruiting and retaining skilled
workers.
The emphasis on cost minimization has also led to another blunder: an
over-concentration on high technology products. Many foreign firms
began by specializing in the mass production and sale of low technology
products, gaining valuable experience and earning tremendous profits.
Later, these corporations were able to break into high technology
markets without much trouble; they simply applied their previous
manufacturing experience and ample financial resources to the
production of higher quality goods. American business has consistently
ignored this very sensible approach.
The recent rash of corporate mergers and acquisitions in the U.S. has
not helped the situation either. While American firms have neglected
long-range planning and production, preferring instead to reap fast
profits through mergers and acquisitions, foreign firms have been quick
to exploit opportunities to ensure their domination over future markets
by investing in the streamlining and modernization of their facilities.
The author of this passage would probably give his greatest support to which
of the following actions by the corporate management of an American
company?
A. Acquiring a smaller company in order to gain financial resources
B. Considering the option of paying the most highly skilled workers a
higher wage
C. Trying to learn from the general management strategy of foreign firms
D. Paying for television advertisements that will win back American
consumers
E. Flooding foreign markets with cheap goods
undisputed control of the world economy, producing goods of such high
quality and low cost that foreign corporations were unable to compete.
But in the mid-1960s the United States began to lose its advantage and
by the 1980s American corporations lagged behind the competition in
many industries. In the computer chip industry, for example, American
corporations had lost most of both domestic and foreign markets by the
early 1980s.
The first analysts to examine the decline of American business blamed
the U.S. government. They argued that stringent governmental
restrictions on the behaviour of American corporations, combined with
the wholehearted support given to foreign firms by their governments,
created and environment in which American products could not
compete. Later analysts blamed predatory corporate raiders who bought
corporations, not to make them more competitive in the face of foreign
competition, but rather to sell off the most lucrative divisions for huge
profits.
Still later analysts blamed the American workforce, citing labour
demands and poor productivity as the reasons American corporations
have been unable to compete with Japanese and European firms.
Finally, a few analysts even censured American consumers for their
unpatriotic purchases of foreign goods. The blame actually lies with
corporate management, which has made serious errors based on
misconceptions about what it takes to be successful in the marketplace.
These missteps involve labour costs, production choices, and growth
strategies.
Even though labour costs typically account for less than 15% of a
product's total cost, management has been quick to blame the costs of
workers' wages for driving up prices, making American goods
uncompetitive. As a result of attempts to minimize the cost of wages,
American corporations have had trouble recruiting and retaining skilled
workers.
The emphasis on cost minimization has also led to another blunder: an
over-concentration on high technology products. Many foreign firms
began by specializing in the mass production and sale of low technology
products, gaining valuable experience and earning tremendous profits.
Later, these corporations were able to break into high technology
markets without much trouble; they simply applied their previous
manufacturing experience and ample financial resources to the
production of higher quality goods. American business has consistently
ignored this very sensible approach.
The recent rash of corporate mergers and acquisitions in the U.S. has
not helped the situation either. While American firms have neglected
long-range planning and production, preferring instead to reap fast
profits through mergers and acquisitions, foreign firms have been quick
to exploit opportunities to ensure their domination over future markets
by investing in the streamlining and modernization of their facilities.
The author of this passage would probably give his greatest support to which
of the following actions by the corporate management of an American
company?
A. Acquiring a smaller company in order to gain financial resources
B. Considering the option of paying the most highly skilled workers a
higher wage
C. Trying to learn from the general management strategy of foreign firms
D. Paying for television advertisements that will win back American
consumers
E. Flooding foreign markets with cheap goods
but no connection to the passage
