Question: Piano Retailers

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Comment on Piano Retailers

Brent I have hard time

MohammedM - October 16, 2019

Brent I have hard time deciding weather the first sentence or the last sentence is the conclusion.Using the Premise therefore conclusion it makes much more sense to have "only way to grow is to buy competitors therefore it is difficult for piano manufacturers to grow in the piano market"

Good point. When reading CR

gmat-admin - October 17, 2019

Good point. When reading CR passages, it's useful to ask "What is the author trying to convince me of?".
Of course, even when we do that here, it's difficult to pinpoint the conclusion. Fortunately, the answer choices provide a nice hint regarding the conclusion.

I thought A was going to be

mruffe - December 9, 2020

I thought A was going to be the answer because if the mergers fail 3 times out of 4 then buying competitors do not guarantee to grow on the market. I guess the part that I miss was the "decline in profits" so it means you might still make some profits even though it is less than before the merge...

Not quite.

gmat-admin - December 9, 2020

Not quite.
I think you're confusing market share with profits.

Consider this example:
There are 10 piano stores in Townsville
In 2018, 100 pianos were purchased in Townsville.
If Company A sold 15 of those pianos, then Company A has a 15% market share.
Notice that nothing is mentioned about Company A's PROFITS, since we know nothing about Company A's expenses.

Now let's say that, in 2019, Company A merged with Company B and Company C, and the newly-merged company sold 50% of the 100 pianos sold in 2019.
This means the market share increased from 15% to 50%.
Even if the newly-merged company suffered huge losses (with regard to profit), that still doesn't change the fact that market share increased.
Since the conclusion pertains only to market share, the information about profit decline has no bearing on the argument.

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