Question

Goodricke Group Ltd is planning to give top priority to the core competence of production and marketing of tea in 2007. The company plans to increase the production of orthodox varieties of tea. Goodricke intends to invest Rs. 10 crore to modernize its factories. The company has reported a net profit of Rs. 5.49 crore for 2006, against Rs. 3.76 crore in 2005.

Which of the following can be deduced from the caselet?

• A. Production and marketing is the core competence of Goodricke Group.
• B. Increase in production of existing products enhances core competence.
• C. Core competence can be used for furthering the company's interests.
• D. Core competence leads to modernization.

Hint:

Check which option merely repeats a fact from the caselet and which one draws a genuine logical conclusion from the trend in profit alongside the investment in core competence.

Answer 1

The Correct Option is C

This question tests how well you can tell a genuine deduction apart from a simple repeat of the passage or an assumption the passage does not back. Read the caselet once more: Goodricke is prioritizing its core competence (tea production and marketing), it plans to spend Rs. 10 crore modernizing factories, and its profit grew from Rs. 3.76 crore to Rs. 5.49 crore between 2005 and 2006. Go through each option and ask whether it follows from the facts, or whether it just repeats them or adds something new.

1. Production and marketing is the core competence of Goodricke Group: this is lifted almost word for word from the caselet itself. Since it is already stated outright, it cannot count as something deduced from the caselet.
2. Increase in production of existing products enhances core competence: the caselet talks about producing more orthodox tea, but nowhere does it say this increase makes the core competence stronger. This option guesses at an effect the passage never claims.
3. Core competence can be used for furthering the company's interests: the company is putting both its focus and its money into its core competence, and in the same period its profit has grown by close to 46 percent. Put together, these facts support the idea that leaning on core competence is working in the company's favour, so this option is a genuine deduction.
4. Core competence leads to modernization: the passage mentions modernizing factories as a separate plan, run alongside the focus on core competence. It never claims one causes the other, so this is an assumption, not a deduction.

Ruling out the three options that either repeat the passage or add an unsupported cause-effect link leaves the option about furthering the company's interests as the one that is properly deduced from the facts given.

Let's summarize:

• A deduction must go beyond restating the passage; option 1 fails this test.
• A deduction cannot invent a cause-effect link the passage never makes; options 2 and 4 fail on this ground.
• Growing profit alongside a sharpened focus on core competence supports the idea that core competence serves the company's wider interests.

So the correct choice is that core competence can be used for furthering the company's interests.