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Outsourcing, or the allocation of specific aspects of a corp
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Updated on: 26 Jan 2021, 11:17
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Outsourcing, or the allocation of specific aspects of a corporation to a business entity specializing in those areas, has become such an integral part of a company’s organizational structure that few question outsourcing’s long-term viability.
Two recent studies on this topic are no exception; both focus on ways in which outsourcing can be improved. Each, for the most part, discusses different aspects of outsourcing. Yet there is one area in which the recommendations of both theories overlap somewhat. Peavy chiefly discusses ways in which companies can mitigate the potential negative effects of confidential information reaching competitors. Presently, when a corporation outsources even a small operational function, it must share information pertaining to this function. In other words, the more of its operation a company entrusts to another business entity, the more confidential information that company will have to release.
According to Peavy, one way to minimize the negative consequences should any of that information fall into a competitor’s hands is to impose stronger penalties on any business entity entrusted with such information, should it divulge that information. However, Peavy is concerned mostly with exploring the effect of increasing the severity of penalties for any one instance of leaked information, and he devotes only one chapter to an existing structural check on such “information leaks”: as a company specializing in outsourcing assumes more clients, its legal liability will increase with each company that becomes a client, an effect, he notes, that becomes more conspicuous the more a company diversifies.
Morgan, on the other hand, looks at those business entities that performed the outsourced work. As such entities grow, their ability to provide specialized services to a specific client diminishes. Since, like most business entities, they are driven to grow profits, often doing so by diversifying, the needs of a specific client are often subordinate to this larger goal. Morgan’s aim is to educate corporations engaged in outsourcing so that they choose a firm that focuses on providing one service. This view, however, is somewhat shortsighted, since the long-term trajectory of a company is not always clear and a firm may end up diversifying.
In this regard, there is a curious overlap between the two studies: in some ways both see problems with diversification, Peavy focusing on the liability and Morgan on the diminishment in quality of the services rendered. Yet it is important to note that Peavy focuses on how diversification negatively affects a company providing services to companies outsourcing, whereas Morgan focuses on how the latter is negatively impacted.
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Question Stats:
65% (03:05) correct
35% (03:44) wrong based on 57 sessions
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The author of the passage considers Morgan’s plan to educate corporations “shortsighted” since it
A. seeks to educate only corporations and not business entities to which corporations outsource work B. assumes that companies that plan to diversify may not end up doing so C. provides advice that might not be relevant in the near future D. fails to distinguish between corporations and companies to which corporations outsource work E. confuses specialized services with services pertaining to the entire operation
Question 2
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53% (01:00) correct
47% (01:15) wrong based on 49 sessions
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The primary purpose of the passage is to
A. describe the way in which two theories conflict B. propose two different solutions to the same problem C. discuss how two studies arrive at contradictory conclusions D. explore two reactions to a phenomenon and draw a parallel E. support one theory and discredit a second
Question 3
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47% (01:35) correct
53% (01:51) wrong based on 47 sessions
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It can be inferred from the passage that which of the following would be most immune to the “structural check”?
A. A company doing outsourcing work that does not diversify in terms of the services it provides B. A company involved in outsourcing that has been entrusted with confidential information from a large number of companies across varying industries C. A business entity that provides one narrow function for a number of corporations D. A company that does not have a clear vision of its long-term trajectory E. A business whose sole existence is based on providing ancillary services to exactly one corporation
Question 4
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35% (01:36) correct
65% (01:29) wrong based on 46 sessions
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According to the passage, which of the following is common to both Peavy’s and Morgan’s studies?
A. Both welcome diversification in business entities providing services for corporations. B. Both discuss the effect that outsourcing has on the long-term viability of a corporation. C. Both explore the way in which diversification and growth within a corporation can affect outsourcing. D. Neither focus on the impact of diversification on business entities providing services for companies outsourcing. E. Neither questions whether outsourcing itself is a beneficial practice for corporations.
Re: Outsourcing, or the allocation of specific aspects of a corp
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09 Dec 2018, 12:50
Q.2- it is mentioned in the passage that these are studies and in the last passage, it shows they kind of have opposite solutions involving same variables. I think answer should be C
Q.3 - In 2nd paragraph, it states that when a company diversifies, it will have more legal liability due to high risk of information leak. A is the opposite of this and hence should be the answer.
Re: Outsourcing, or the allocation of specific aspects of a corp
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10 Dec 2018, 09:55
Expert Reply
C is wrong because the main idea of the passage is not that two separate studies that arrive to two conflict answers.
The passage says that two scientists explore outsourcing as a method for the company to subside the production and they explore different angles of the same.
And regarding one small area, the studies overlap. That's it
See this video in which Ron Purewal(ex-tutor at GMAT prep) explains the main idea of the passage.
Re: Outsourcing, or the allocation of specific aspects of a corp
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29 Aug 2019, 09:03
For question #1 I ended up picking C through process of elimination but I am still a little confused by it. The passage seems to contradict the idea that the advice will be irrevelqnt in the near future because it pertains to the “long term,” prospects of a company and their potential to diversify in the future
Re: Outsourcing, or the allocation of specific aspects of a corp
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11 Sep 2019, 14:55
Expert Reply
A. Both welcome diversification in business entities providing services for corporations.
This is too broad as an answer. They already say that diversification is a vital part of a company's strategy. However, they study the implications of diversification in an area not that much explored
B. Both discuss the effect that outsourcing has on the long-term viability of a corporation.
Only Peavy
C. Both explore the way in which diversification and growth within a corporation can affect outsourcing.
Maybe is the other way around. Outsourcing influences the company way of acting
D. Neither focus on the impact of diversification on business entities providing services for companies outsourcing.
Not true
E. Neither questions whether outsourcing itself is a beneficial practice for corporations.
true. Both are aware of diversification and its benefits
Re: Outsourcing, or the allocation of specific aspects of a corp
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10 Nov 2019, 10:00
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Expert Reply
According to Peavy, one way to minimize the negative consequences should any of that information fall into a competitor’s hands is to impose stronger penalties on any business entity entrusted with such information, should it divulge that information. However, Peavy is concerned mostly with exploring the effect of increasing the severity of penalties for any one instance of leaked information, and he devotes only one chapter to an existing structural check on such “information leaks”: as a company specializing in outsourcing assumes more clients, its legal liability will increase with each company that becomes a client, an effect, he notes, that becomes more conspicuous the more a company diversifies.
All the above means that the leaks increase the more a company interacts with more clients. And the structural check means the company went far beyond this and get several ramifications on which we have to check possible leaks
It can be inferred from the passage that which of the following would be most immune to the “structural check”?
A. A company doing outsourcing work that does not diversify in terms of the services it provides
No mentions of services
B. A company involved in outsourcing that has been entrusted with confidential information from a large number of companies across varying industries
no several different industries are mentioned, the wording says this basically
C. A business entity that provides one narrow function for a number of corporations
narrow ties in operation are not mentioned
D. A company that does not have a clear vision of its long-term trajectory
long term strategy is not mentioned
E. A business whose sole existence is based on providing ancillary services to exactly one corporation
What we said. One company interacts with one company only. No possible leaks. So it is immune
Re: Outsourcing, or the allocation of specific aspects of a corp
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06 Sep 2022, 01:02
Outsourcing is the business practice of hiring a party outside a company to perform services or create goods that were traditionally performed in-house by the company's own employees and staff. If you need IT outsourcing services you must go for WebFocus. It will provide a lot of help.
Re: Outsourcing, or the allocation of specific aspects of a corp
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31 Oct 2024, 21:12
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Re: Outsourcing, or the allocation of specific aspects of a corp [#permalink]