For Business Executives, Managing Growth of a Company at an Appropriate Rate is a Central Challenge GMAT Reading Comprehension

Reading Passage Question

For business executives, managing the growth of a company at an appropriate rate is a central challenge. For small businesses, the issue is even more critical. An improperly managed small business usually does (5) not have the necessary cash reserves to overcome mismanagement, and if growth is neither sustained nor managed properly, the existence of the business can be jeopardized.

A number of experts have suggested that a strong (10) guiding business plan is the key to handling small business growth. A potent and well-formulated plan can lay the foundation for years of rising profitability, and can help a small business prepare for changes in the market. While a strong business plan can help a business (15) grow, a good plan does not ensure growth. At times, market conditions change so rapidly as to relegate the plan to obsolescence. In other businesses, the plan is not used as intended, or is simply ignored. Evidence from a number of business case studies suggests that a more (20) important factor in managing growth is the presence of an executive with a clear vision of the business and its market position. If there is also a competent business plan in place, this can assist the executive, but leaders with a strong market vision can easily overcome the lack (25) of a good business plan. The truth of this assertion is borne out by the experience of one regional travel agency. Although the company did not have even a basic business plan in place, they had a forceful, involved leader who (30) understood the dynamics of the marketplace. With the rise of the internet, revenues from the consumer travel market began to wane. Realizing that the market landscape was changing irrevocably, the executive quickly initiated a retrenchment that dropped most (35) consumer lines of business and instead focused on handling outsourced business travel. By repositioning the company as business travel specialists and increasing quality of service—24-hour service availability, emergency travel specialists, and business concierges— (40) the company was able to increase revenues by over 500% yearly.

“For business executives, managing growth of a company at an appropriate rate is a central challenge”- is a GMAT reading comprehension passage with answers. Candidates need a strong knowledge of English GMAT reading comprehension.

This GMAT Reading Comprehension consists of 4 comprehension questions. The GMAT Reading Comprehension questions are designed for the purpose of testing candidates’ abilities in understanding, analyzing, and applying information or concepts. Candidates can actively prepare with the help of GMAT Reading Comprehension Practice Questions.

Solution and Explanation

1. Which of the following best states the main idea of the passage?

(A) Market repositioning by a travel agency can foster growth and increase revenues.
(B) A strong business plan, while helpful, is not essential to managing business growth.
(C) Ignoring a business plan can be detrimental to the economic well-being of a business.
(D) Improperly managed small businesses can run out of cash reserves.
(E) A strong executive is necessary for business success.

2. According to the passage, which of the following statements about business growth is likely to be true?

(A) The size of the business can affect the importance of growth management.
(B) Experts agree on the importance of a strong business plan to business growth.
(C) A leader with a strong business vision will make a business succeed.
(D) Improper management of business growth will kill the business.
(E) Regional travel agencies provide a model for general business growth

3. Which of the following best describes the way the last paragraph functions in the context of the passage?

(A) An example is presented to undermine the assertion that a leader with vision can succeed without a business plan.
(B) The elements of a company’s success are outlined to prove a point about changing market conditions.
(C) A chain of reasoning is discussed in order to identify assumptions.
(D) A specific example is presented to illustrate a point made in the previous paragraph.
(E) The main conclusion of the passage is stated.

4. The author’s attitude toward the view that business plans are essential is best described as

(A) unequivocal agreement
(B) tentative acceptance
(C) mild skepticism
(D) grudging acceptance
(E) studious criticism

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