CR: focusing on one major product or service

[divineacclivity]

Companies are often torn between the benefits of focusing on one major product or service and the drawbacks of
relying too heavily on one primary source of income. While narrow focus can provide a company with an advantage
over competitors that offer a wider range of products or services, an undiversified income stream can leave a
company susceptible to major fluctuations in cash flow. We can see this tension realized when, for example,
________________. Which of the following best completes the passage below?
- a local messenger service known for its speedy deliveries is forced to lay off twenty percent of its work force after
a rise in local taxes encourages many local businesses to move out of state
- an advertising agency loses one of its clients
- a holding company that owns a car rental agency and a national doughnut chain is now interested in purchasing a
professional basketball team
- a construction company opts to use non-union labor to increase its profits
- a specialty sandwich store decides to open franchises throughout the country that will focus on using local ingredients
OA: A
Source of the CR question: CR 700 to 800 practice Questions

I chose C.
"We can see this tension realized when .." - this part to me meant that a corporate/company realized that it could be harmful to focus on one thing and diversified its products/services. Going by this thought, I was looking for an example where a firm realized it (the argument) and diversified and hence I chose option C
Also, option A says "encourages many local businesses to move out of state". So, who knows even if they were into different products/services rather than focusing on just one, the rise in local businesses could have made all of them move out of state or something.
Could you please help me understand the OA better? Thanks in advance.

[Willy]

Companies are often torn between the benefits of focusing on one major product or service and the drawbacks of
relying too heavily on one primary source of income. While narrow focus can provide a company with an advantage
over competitors that offer a wider range of products or services, an undiversified income stream can leave a
company susceptible to major fluctuations in cash flow. We can see this tension realized when, for example,
________________. Which of the following best completes the passage below?
- a local messenger service known for its speedy deliveries is forced to lay off twenty percent of its work force after
a rise in local taxes encourages many local businesses to move out of state
- an advertising agency loses one of its clients
- a holding company that owns a car rental agency and a national doughnut chain is now interested in purchasing a
professional basketball team
- a construction company opts to use non-union labor to increase its profits
- a specialty sandwich store decides to open franchises throughout the country that will focus on using local ingredients
OA: A
Source of the CR question: CR 700 to 800 practice Questions

I chose C.
"We can see this tension realized when .." - this part to me meant that a corporate/company realized that it could be harmful to focus on one thing and diversified its products/services. Going by this thought, I was looking for an example where a firm realized it (the argument) and diversified and hence I chose option C
Also, option A says "encourages many local businesses to move out of state". So, who knows even if they were into different products/services rather than focusing on just one, the rise in local businesses could have made all of them move out of state or something.
Could you please help me understand the OA better? Thanks in advance.

Correct answer is A.

I think you are over thinking with the logic. Think about what argument says about TENSION? What is the "tension" in the argument?

TENSION in the argument is between the benefits of focusing on one primary product/service and the risks of relying too heavily on an undiversified income stream.

So all we need is the example for the above case. Option A says

a local messenger service known for its speedy deliveries is forced to lay off twenty percent of its work force after a rise in local taxes encourages many local businesses to move out of state

Following parts clearly shows what we want as in an example -

a local messenger service --> focusing on one primary product/service

known for its speedy deliveries --> enjoys an advantage
over competitors

forced to lay off twenty percent of its work force after a rise in local taxes encourages many local businesses to move out of state --- > risks of relying too heavily on an undiversified income stream

[tim]

please clarify the source of this one. if there is actually a book called "CR 700 to 800 practice Questions", we won't be able to help with this one, because we do not encourage you to use problems from sources other than the GMAT or MGMAT..

[mehul.mishra]

The question came in my MGMAT Cat 1
I took chose a different answer from A because the answer choice specified "Many Businesses" so a diversified income stream would not help the messenger company either

[RonPurewal]

our CAT problems have their own folder.

thus, please (a) search that folder for an existing thread, and, if you don't find one, (b) kindly re-post your question(s), along with the problem itself, in the correct folder.

thank you.