CAT 2021 Slot 1 · VARC · Question 24

CAT 2021 Slot 1 previous year question on Para Summary, with the answer and a step-by-step solution.

Para SummaryVerbal AbilityMultiple choiceMedium

The passage given below is followed by four alternate summaries. Choose the option that best captures the essence of the passage.

Developing countries are becoming hotbeds of business innovation in much the same way as Japan did from the 1950s onwards. They are reinventing systems of production and distribution, and experimenting with entirely new business models. Why are countries that were until recently associated with cheap hands now becoming leaders in innovation? Driven by a mixture of ambition and fear they are relentlessly climbing up the value chain. Emerging-market champions have not only proved highly competitive in their own backyards, they are also going global themselves.

  1. A

    Production and distribution models are going through rapid innovations worldwide as developed countries are being challenged by their earlier suppliers from the developing world.

  2. B

    Competition has driven emerging economies, once suppliers of cheap labour, to become innovators of business models that have enabled them to move up the value chain and go global.

  3. C

    Innovations in production and distribution are helping emerging economies compete with countries to which they once supplied cheap labour.

  4. D

    Developing countries are being forced to invent new business models which challenge the old business models, so they can remain competitive domestically.

Pick an option, then check.
Answer & solution

Answer: Option B

The key points are:
- Developing countries, once known for cheap labour, are now innovating in business models.
- They are driven by ambition and fear (competition) to climb up the value chain.
- They compete strongly at home and are also going global.

Option 2 covers all of these: competition has pushed emerging economies, once sources of cheap labour, to innovate, move up the value chain and go global.

Option 1 shifts the focus to developed countries being challenged and to innovation 'worldwide'.

Option 3 says they compete with the countries they once supplied, which the passage does not say, and it leaves out going global.

Option 4 says the aim is to stay competitive only 'domestically', but the passage stresses going global too.

Shortcut: check each option for 'value chain' and 'going global' – the passage's two main ideas. Only option 2 has both.

Hence, the answer is option 2.

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