Gmat prep RC

[Raja sekharS832]

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 preindustrial world, grafting a system of capitalist international trade onto a premodern 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.

The author's main point is that
(A) modern multinationals originated in the sixteenth 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 operations
(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

early trading companies organized effectively in remarkably modern ways and merit further study as analogues of more modern structures.- This sentence made me to select option E. But official answer is C. May be the author suggested scholars to take early trading companies seriously but he never said they should take.

[RonPurewal]

the second paragraph starts with "The early trading companies did differ strikingly from modern multinationals in many respects". that very plainly rules out choice E, since it says EXACTLY THE OPPOSITE of what choice E says. (for choice E to be true, there should be NO large differences.)

[RonPurewal]

as far as how to pick the correct answer, just look at how the overall passage is put together.

and don't forget—the words MAIN and PRIMARY mean something!
if there's a MAIN idea, then, by definition, there must be other ideas that are NOT the main idea -- and you need to EXCLUDE those.
if there's a PRIMARY purpose, then, by definition, there must be at least one secondary purpose -- and you need to EXCLUDE secondary purpose(s).

if you're asked for a MAIN idea, or a PRIMARY purpose, YOU MUST EXCLUDE STUFF from the passage.

this isn't some esoteric piece of knowledge; this is just ... thinking about what words mean. imagine you attend a talk, and then your friend asks you, "what did the speaker MAINLY talk about?"
...you get me. you're not going to run off a complete list of everything the speaker said!

so... what's in the passage?
• there's a HUGE chunk of SIMILARITIES between the old things and modern companies.
• there's a MUCH SMALLER chunk of DIFFERENCES. since this chunk is much smaller, you know it's not getting the MAIN emphasis.
• then, the passage closes with "Despite these differences, however, early trading companies organized effectively in remarkably modern ways and merit further study as analogues of more modern structures"

so, the main point is pretty clear:
there were lots of similarities
(... and some differences, which, in the big picture, are NOT of primary importance)
...and so the old structures merit further study as analogues of more modern structures

that's definitely choice C.

[JbhB682]

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 preindustrial world, grafting a system of capitalist international trade onto a premodern 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.

The author's main point is that
(A) modern multinationals originated in the sixteenth 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 operations
(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

early trading companies organized effectively in remarkably modern ways and merit further study as analogues of more modern structures.- This sentence made me to select option E. But official answer is C. May be the author suggested scholars to take early trading companies seriously but he never said they should take.

6. 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 management structure in such companies
(B) demonstrate that the volume of business transactions of such companies 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

Hi - why is option A wrong ?

Doesn't the author list the activities in blue and writes the pink piece in order to say :

these activities listed in blue -- > created large volume --> necessitated change in management structure (per the pink)

Isn't that what option A says (or)

Is option A wrong because of the word "analyze" ? there technically is no analysis on this other than just stating this fact (i.e. activities in blue led to large volume which in turn necessitated change in management structure per the pink... the author just states this fact and really there is nothing to analyze other than this fact)

[Sage Pearce-Higgins]

You're right that answer A mentions 'analyze' but there's no analysis in the passage. It also mentions 'the various ways'. Looking in the passage, I can't see any listing of the ways (note: plural) that these activities contributed to changes.

The real key to this question comes before the blue part: '...the volume of their transactions is assumed to have been too low ... to make comparisons with modern multinationals interesting. In reality, however, ...'. We can see that the activities are being listed to refute an earlier point.

[JbhB682]

3. The passage suggests that modern multinationals differ from early chartered trading companies in that

(A) the top managers of modern multinationals own stock in their own companies rather than simply receiving a salary
(B) modern multinationals depend on a system of capitalist international trade rather than on less modern trading systems
(C) modern multinationals have operations in a number of different foreign countries rather than merely in one or two
(D) the operations of modern multinationals are highly profitable despite the more stringent environmental and safety regulations of modern governments
(E) the overseas operations of modern multinationals are not governed by the national interests of their home countries


Hi - I thought E was wrong because nowhere in the passage is it explicitly mentioned that national interests are NEVER governing the overseas operations for modern multinationals.

Doesn't E assume, not ONE modern multinational acts in the national interest (which is a bit of stretch)

[Sage Pearce-Higgins]

I thought E was wrong because nowhere in the passage is it explicitly mentioned that national interests are NEVER governing the overseas operations for modern multinationals.

Watch out for inference questions. An inference is something that is not stated directly, but which you can deduce from the information given in the passage. Therefore don't look for an explicit statement of the answer, but eliminate wrong answers that might not be true based on what the passage states. Let me give you an analogy: "Pierre differs from Mohamed in that Pierre has brown hair." You can deduce from this that Mohamed doesn't have brown hair, although it's not explicitly stated in the sentence.

As for the word "never", I encourage you to be reasonable with your interpretation of a sentence. If I said "Unlike people in Bolivia, people in India like cricket." it doesn't mean that every person in India, without exception, likes cricket and that no-one in Bolivia, without exception, likes cricket. It means that, generally, cricket is a popular sport in India, but not in Bolivia. Most language includes some level of vagueness or approximation (that's why Math was invented!) and we often have to take a middle-ground, reasonable interpretation of a sentence.

[JbhB682]

Thank you so much Sage for following up..

I noticed you mentioned that "Most language includes some level of vagueness or approximation (that's why Math was invented!)"

How would you then square this with instructions in the Manhattan guide re: inferences

Per the Manhattan guide, inferences HAVE TO BE true

[Sage Pearce-Higgins]

I don't think that there's a contradiction here. I might just add 'based on a reasonable interpretation of the language used, GMAT inferences have to be true'.

My point is simply that the definitions of words are not as clearly defined as the definitions of mathematical terms. Perhaps you've had frustrating conversations with people who seem to willfully misinterpret what you say. For example:
JBH: I think most people find the GMAT difficult.
Sage: not at all, most people have never heard of the GMAT.
JBH: Okay, I mean most people who take the GMAT find it difficult.
Sage: I disagree. You can find the GMAT really easily if you just Google it.
JBH: No, I mean that they find it difficult to get the score that they want.
Sage: The score that who want?
JBH: Stop annoying me! I mean the score that the people taking the GMAT want from their own test.
Sage: And are you including Lego people in your definition of 'people'?
JBH: I'm leaving this conversation.