Many policymakers adopt macro approach to environmental problems in emerging markets (countries experiencing rapid economic growth): discussion ambiti...
GMAT Reading Comprehension : (RC) Questions
Many policymakers adopt macro approach to environmental problems in emerging markets (countries experiencing rapid economic growth): discussion ambitious regulations in global forums and looking to giant multinational companies and non-governmental organizations (NGOs) for insight. But examining what successful companies in these countries are already doing to make growth more environmentally sustainable may make more sense.
One study identifies several such firms that are turning eco-consciousness into a source of competitive advantage. The most salient quality of these highly profitable companies is that they turn limitations (of resources, labor, and infrastructure) into opportunities.
An Indian cement company suffering water shortages, developed the world's most water efficient cement-making method, using air cooling rather than water cooling. A Philippines utility reduced its water loss through wastage and illegal tapping from 63% (1997) to 12% (2010) by making water more affordable for low-income consumers. A Chinese company makes air conditioners powered with building's waste heat, reducing strain on the electric grid.
The companies also seek to shape their business environment to support sustainable objectives. Some lobby regulators: a Brazilian organic-sugar producer works with Brazil's government to establish an organic certification system. Some form partnerships: Kenya's Equity Bank allies with international groups to reduce its risks when lending to smallholders or single family-farms; a Brazilian cosmetics company works with suppliers to produce sustainable packaging. Some firms also work to reach and educate lower-income consumers, sacrificing short term profits to create future markets: a Chilean forest tree company organizes local carpenters into networks and connects them to low income customers.
One could quibble with the study. Switzerland's Phil Rosenzweig has argued that management writers are prone to a halo effect: they treat the company's temporary success as proof that it has discovered some eternal principle of good management. That some successful companies have embraced environmental sustainability does not prove that it makes companies successful. Some firms, having prospered, can afford splurging on green initiatives; some pursue eco-initiatives for public-relations purposes.
Nonetheless, the study is thought-provoking. Critics argue that environmentalism is a rich-world luxury, but such fears are overblown. When natural resources are scarce and consumers are cash strapped, sustainability can be lucrative business strategy.
It can most reasonably be inferred from the passage that multinational companies
1. Passage Analysis:
Progressive Passage Analysis
| Text from Passage | Analysis |
|---|---|
| Many policymakers adopt macro approach to environmental problems in emerging markets (countries experiencing rapid economic growth): discussion ambitious regulations in global forums and looking to giant multinational copanies and non-governmental organizations (NGOs) for insight. | What it says: Politicians dealing with environmental issues in fast-growing countries focus on big-picture solutions - they talk about major rules in international meetings and ask huge companies and NGOs for advice. What it does: Sets up the current conventional approach that will likely be contrasted later Source/Type: Author's factual observation about policymaker behavior Connection to Previous Sentences: This is our opening - establishes the status quo Visualization: Think of politicians sitting in conferences discussing broad environmental regulations for countries like India, Brazil, China Reading Strategy Insight: Opening sentences in RC often set up a position that will be challenged or refined - stay alert for a "but" or contrast coming |
2. Passage Summary:
Author's Purpose:
To show why policymakers should learn from successful companies in emerging markets rather than focusing on big-picture environmental regulations.
Main Point:
When resources are limited and customers have little money, environmental sustainability can be a smart business strategy that helps companies succeed, which means environmentalism is not just a luxury for wealthy countries.
3. Question Analysis:
The question asks what can be reasonably inferred about multinational companies based on the passage. This is an inference question, so we need to find what the passage suggests about multinationals without being explicitly stated.
Why It's Wrong:
• The passage doesn't discuss multinational success rates when partnering with local sustainable companies
• The passage advocates learning FROM local companies, not necessarily partnering WITH them
• No evidence suggests multinationals become more successful through such alliances
Common Student Mistakes:
- Did you think the passage recommends partnerships because it mentions some companies forming partnerships?
→ The partnerships mentioned are between local companies and other organizations, not multinationals allying with local firms - Did you assume that since local companies are successful, multinationals should partner with them?
→ The passage suggests learning from local approaches, not necessarily forming business partnerships
Why It's Wrong:
• The halo effect criticism applies to business research generally, not specifically to multinational vs. national companies
• Rosenzweig's critique is about research methodology, not company structure
• No comparison is made between multinationals and single-nation companies regarding susceptibility to halo effect
Common Student Mistakes:
- Did you think the halo effect criticism was specifically about multinational companies?
→ The halo effect refers to how researchers incorrectly assume successful companies have found eternal management principles - Did you assume multinationals are less prone to research bias?
→ The passage doesn't make any distinction about which types of companies are more/less susceptible to halo effect
Why It's Wrong:
• The passage doesn't mention multinationals buying out successful local companies
• No discussion of acquisition trends or multinational expansion strategies
• The focus is on learning from local practices, not corporate takeovers
Common Student Mistakes:
- Did you assume successful local companies would naturally become acquisition targets?
→ The passage focuses on studying successful practices, not business transactions - Did you think "increasingly likely" was supported by the passage's forward-looking tone?
→ The passage discusses current successful practices, not future acquisition trends
Why It's Wrong:
• The passage doesn't specifically discuss multinational company profitability thresholds
• While it mentions some firms "having prospered, can afford splurging on green initiatives," this applies to companies generally
• No specific focus on multinationals' implementation patterns based on profitability levels
Common Student Mistakes:
- Did you connect the "having prospered" comment specifically to multinationals?
→ This comment was about companies in general as part of the halo effect criticism - Did you assume large-scale initiatives require high profitability?
→ The passage actually shows successful companies turning limitations into opportunities, suggesting innovation can happen regardless of wealth levels
Why It's Right:
• The passage contrasts multinational-focused "macro approach" with successful local company strategies
• Local companies excel at turning limitations into opportunities with resource-efficient solutions
• Multinationals are associated with "ambitious regulations in global forums" - large-scale approaches
• The successful local initiatives are specifically adapted to emerging market constraints (water shortages, poor consumers, limited infrastructure)
• The contrast structure implies multinationals pursue different approaches than these successful local strategies
Key Evidence: "Many policymakers adopt macro approach to environmental problems in emerging markets... looking to giant multinational companies... But examining what successful companies in these countries are already doing... may make more sense."