GMAT Critical Reasoning

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Source: PREP

Level: 4

Outsourcing is the practice of obtaining from an independent supplier a product or service that a company has previously provided for itself. Vernon, Inc., a small manufacturing company that has in recent years experienced a decline in its profits, plans to boost its profits by outsourcing those parts of its business that independent suppliers can provide at lower cost than Vernon can itself.

Which of the following, if true, most strongly supports the prediction that Vernon's plan will achieve its goal?

  • A Among the parts of its business that Vernon does not plan to outsource are some that require standards of accuracy too high for most independent suppliers to provide at lower cost than Vernon can.
  • B Vernon itself acts as an independent supplier of specialized hardware items to certain manufacturers that formerly made those items themselves.
  • C Relatively few manufacturers that start as independent suppliers have been able to expand their business and become direct competitors of the companies they once supplied.
  • D Vernon plans to select the independent suppliers it will use on the basis of submitted bids.
  • E Attending to certain tasks that Vernon performs relatively inefficiently has taken up much of the time and effort of top managers whose time would have been better spent attending to Vernon's core business.

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