A company that decides to make rather than buy important parts can lock itself into an outdated
technology. Independent suppliers may be unwilling to share innovations with assemblers with
whom they are competing. Moreover, when an assembler sets out to master the technology of
producing advanced components, the resulting demands on its resources may compromise its
ability to assemble these components successfully into end products. Long-term contracts with
suppliers can achieve many of the same cost benefits as backward integration without
compromising a company’s ability to innovate.
However, moving away from backward integration is not a complete solution either. Developing
innovative technologies requires independent suppliers of components to invest huge sums in
research and development. The resulting low profit margins on the sale of components threaten the
long-term financial stability of these firms. Because the ability of end-product assemblers to
respond to market opportunities depends heavily on suppliers of components, assemblers are often
forced to integrate by purchasing the suppliers of components just to keep their suppliers in
business.
259. Which of the following best describes the way the last paragraph functions in the context of
the passage?
(A) The last in a series of arguments supporting the central argument of the passage is presented.
(B) A viewpoint is presented which qualifies one presented earlier in the passage.
(C) Evidence is presented in support of the argument developed in the preceding paragrap.
(D) Questions arising from the earlier discussion are identified as points of departure for further study of the topic.
(B)
(E) A specific example is presented to illustrate the main elements of argument presented in the earlier paragraphs.
This question asks you to choose the statement that best describes the function of the last
paragraph of the passage. The best answer is B.
At the end of the third paragraph, the author indicates that assemblers benefit from contracting with, rather than owning, independent suppliers. In the last paragraph, however, the author indicates that contracting with independent suppliers can itself present problems. Thus the last paragraph qualifies the viewpoint presented at the end of the third paragraph.