Companies Whose Products and Product Manufacturing Processes have a Physical Presence GMAT Reading Comprehension

Reading Passage Question:

Companies whose products and product manufacturing processes have a physical presence are typically called brick and mortar companies (B&M companies). Automobile manufacturing companies are a good example of this category. On the other hand, Digital Firms are those whose products have only a virtual presence. Email services, social media, and e-commerce platforms fall under this category.

There are several factors that have a tangible impact on the growth and functioning of companies of both categories. One of them is the skill requirement for labor. B&M companies do not usually require labor that is skilled in various disciplines. In fact, they merely require hardworking labor. The company can train any laborer with a specific skill set required to meet its production goals. Digital Firms – on the other hand – require workers who have a multi-disciplinary skill set and are comfortable with the cross-functional application of knowledge. For instance, a worker in an automobile manufacturing unit has a very specific role, such as doing a quality check of a particular part or ensuring that the parts on the assembly line are according to the given specifications, etc. A programmer in a software company, on the other hand, is expected to possess knowledge related to various aspects such as customer needs, user interface design, user experience, etc., and to apply such knowledge to some extent while building the software. Additionally, B&M companies cannot thrive under restrictive government policies, whereas Digital Firms are rarely impacted by such policies, owing to their virtual presence. Also, when it comes to physical resources such as metal ore, heavy machinery, buildings, etc., B&M companies’ functioning is significantly impacted by their availability, while digital firms’ functioning isn’t as much impacted as long as their servers are powered.

Such differences in the conditions needed for the growth and functioning of these firms, due to the impact of various factors are clearly evident in the choice of geographical locations. Automobile manufacturers, heavy machinery manufacturers, and other such brick and mortar companies are primarily based out of Europe – the region with lots of resource availability, labor that can be easily trained for specific jobs, and a wide range of government policies across various countries providing a diverse range of options to choose from for industrialists. Most of the established Social media companies, email service providers, etc. are based out of North America and China. In fact, the world’s top 15 digital firms are either American or Chinese. North America is a land that attracts a huge number of skilled immigrants, the kind of people best suited for jobs in digital firms. The restrictive government policies in North America and China significantly hamper the profit-making endeavors of any brick and mortar companies while allowing easier growth opportunities for digital firms. Similarly, the restrictive data policies in Europe make it difficult for digital firms to thrive in that region. Clearly, the majority of the B&M companies of Europe would have a hard time surviving in the American or the Chinese environment.

‘Companies whose products and product manufacturing processes have a physical presence’’ is a GMAT reading comprehension passage with answers. Candidates need a strong knowledge of English GMAT reading comprehension.

This GMAT Reading Comprehension consists of 7 comprehension questions.

The GMAT Reading Comprehension questions are designed for the purpose of testing candidates’ abilities in understanding, analysing, and applying information or concepts. Candidates can actively prepare with the help of GMAT Reading Comprehension Practice Questions.

Questions and Solutions

1. What is the main point of the passage?

1. To point out the problems faced by brick and mortar companies
2. To point out the difficulties faced by entrepreneurs of digital firms
3. To explain the factors that affect the growth of B&M companies and compare them with that of digital firms
4. To illustrate that brick and mortar companies likely cannot thrive in the same environment as digital firms do, due to a difference in conditions needed for each of these company types to function and grow
5. To show how digital firms thrive in the American and Chinese economies

2. Which of the following can be inferred from the passage?

1. Car manufacturing companies do not have as much necessity to hire workers with multi-disciplinary skillset as digital firms do.
2. Physical resources are equally important for B&M companies and digital firms alike.
3. Geographical location has a huge impact on the production capacity of automobile manufacturing firms.
4. Doing a quality check of a particular part in an automobile manufacturing company requires a combination of skills.
5. User interface design and user experience are two skills that are optional for workers in a software company.

3. The passage does not support which of the following statements.

1. Automobile manufacturing companies are primarily located in Europe.
2. Not many of the top 15 digital firms are based out of Europe.
3. Social media companies are considered digital firms.
4. The conditions in Chinese economy are geared towards an encouraging environment for digital firms.
5. There is no digital firm that offers social media services or email services that is based out of Europe.

4. In the context of the passage as a whole, the second paragraph is primarily intended to

1. Introduce the concepts of B&M companies and digital firms
2. Illustrate how certain factors impact B&M companies differently from digital firms, leading to a difference in conditions favourable for these companies
3. Map the growth factors of these companies with the conditions of the geographical locations they are primarily situated in.
4. To explain why digital firms cannot thrive in the same location as B&M companies
5. To explain why B&M companies cannot thrive in the same location as digital firms

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