Following several years of declining advertsisng sales

[accguy]

Following several years of declining advertising sales, the Greenville Times reorganized its advertising sales force two years ago. Before the reorganization, the sales force was organized geographically, with some sales respresentatives concentrating on city-center businesses and others concentrating on different outlying regions. The reorganization attempted to increase the sales representatives' knowledge of clients' businesses by having each sales representative deal with only one type of industry or of retailing. After the reorganization, advertising sales increased.

In assessing whether the improvement in advertising sales can properly be attributed to the reorganization , it would be helpful to find out each of the following EXCEPT:

A) Two years ago, what proportion of the Greenville Times's total revenue was generated by advertising sales?

B) Has the circulation of the Greenville Times increased substantially in the last two years?

C) Has there been a substantial turnover in personnel in the adverstising sales force over the last two years?

D) Before the reorganization, had sales representatives found it difficult to keep up with relevant developments in all types of businesses to which they are assigned?

E) Has the economy in Greenville and the surrounding regions been grwoing rapidly over the last two years?

I chose E, but the correct answer is A. Can someone please explain how E is helpful in assessing the improvement of advertising sales and why A is irrelevant?

[kylo]

hmmmmm! tricky question.

E - if the economy improves then people have more money to spend & hence there is a possibility that more people will buy Greenville Times & therefore the increase in advertising sales.


A - assume that, 2yrs ago, Greenville Times generated revenue thru 2 businesses.
total revenue = advertising sales (50%) + real estate income (50%).
after 2yrs, there is a possibility that the advertising sales have increased in pure numeric value but the real estate income increased so much that contribution of advertising sales is less than 50%. In this case, we will get a distorted picture of the advertising sales revenue for Greenville Times.
hence A is irrelevant.


Thanks!

[Guest]

hmmmmm! tricky question.

E - if the economy improves then people have more money to spend & hence there is a possibility that more people will buy Greenville Times & therefore the increase in advertising sales.

Kylo,

I am still not convinced how E is relevant. I am not able to make the connection between growth of the economy and the reorganization. There are far too many variables in the economy that could affect/change Greenville Times' advertising sales.

You have mentioned only one variable where people might spend more. Growth in economy could also result in increased sales/marketshare of Greenville's competitors that could probably offset any growth Greenville might have achieved due to the reorganization.

I feel this is not the case with option A where a certain variable (change in Greenville Times's total revenue) is specifically mentioned.

[accguy]

MGMAT Instructors, can you please give your views on why E is the correct answer to this question? Appreciate any help. Thanks!

[accguy]

Any takers??

[RonPurewal]

you're interested in anything that
* could affect the advertising sales,
BUT
* isn't caused by the reorganization.

(e) is definitely relevant: if there has been substantial and rapid economic growth, then this could cause a spike in advertising sales that's not at all related to the internal reorganization of the sales department. therefore, we need to know whether this has happened in order to properly determine cause and effect.

(a) doesn't matter: we don't care about any other revenue, besides advertising-sales revenue.
and even if we did care about those types of revenue, the proportion still wouldn't tell us anything at all about whether, or by how much, advertising sales revenue has gone up or down.
either of these two reasons is enough to eliminate this choice; the combination of both is absolutely beyond all doubt.

[RonPurewal]

I feel this is not the case with option A where a certain variable (change in Greenville Times's total revenue) is specifically mentioned.

see, here's the problem. they don't mention anything, at all, about the change in the times's total revenue.

the scope of choice (a) is limited to the percentage of revenue that comes from advertising sales - and that's something that's completely unrelated to the change in revenue. the revenue itself could jump by 10,000 per cent, and the proportions wouldn't change at all as long as they grew by the same factor.

note the tricky question: the question is actually asking for the choice that doesn't help us evaluate the issue. therefore, we say that choice (a) is irrelevant, we are actually marking that choice as the CORRECT answer!

[sriram.sundarraj]

According to the prep software, the correct answer for this question is A.

[RonPurewal]

According to the prep software, the correct answer for this question is A.

yes. see the post above: in this problem, we are actually looking for the choice that has NO effect on the issue being considered. therefore, we say that choice (a) is irrelevant, this actually makes that choice the correct answer!

[jackiesong83]

why is B) wrong? Are we saying that the increased circulation caused the increased advertising sales, not the reorg?

[chunyang.yu]

why is B) wrong? Are we saying that the increased circulation caused the increased advertising sales, not the reorg?

If the Greenville Times has a small circulation, few businesses are willing to set advertisings on it, by contrary, if its circulation increased, it will atract businesses to buy its advertise

[tim]

Thanks Chunyang. Yes B is definitely relevant - and thus not the correct answer..

[vivekcall81]

C) Has there been a substantial turnover in personnel in the adverstising sales force over the last two years?

What does "Substantial turnover", means?

please explain

[becarev]

I get why the right answer is A, but there's another thing about the question that confuses me, and I'm afraid it may trip me up on another occasion.

"Advertising Sales" - does this mean sales of the newspaper that are due to the advertising activity of the representatives, or, does it mean the sales of advertising space available in the newspaper (another words, the representatives try to sell ad space to industries in their own newspaper)

I think the answer A makes sense for both meanings, but... I'd appreciate clarification...

[becarev]

"substantial turnover" means: the personnel have changed a lot (substantially), ie a significant number of workers in the sales force have left work to be replaced by others.