The fact that superior service can generate a competitive : GMAT Reading Comprehension (RC)
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# The fact that superior service can generate a competitive

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The fact that superior service can generate a competitive [#permalink]

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25 Jul 2008, 04:38
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Practice Passage
Passage No.: 10
Questions: 50 to 55
Page: 40, 41
Difficulty:

The fact that superior service can generate a competitive advantage for a company does not mean that every attempt at improving service will create such an advantage. Investments in service, like those in production and distribution, must be balanced against other types of investments on the basis of direct, tangible benefits such as cost reduction and increased revenues. If a company is already effectively on a par with its competitors because it provides service that avoids a damaging reputation and keeps customers from leaving at an unacceptable rate, then investment in higher service levels may be wasted, since service is a deciding factor for customers only in extreme situations.

This truth was not apparent to managers of one regional bank, which failed to improve its competitive position despite its investment in reducing the time a customer had to wait for a teller. The bank managers did not recognize the level of customer inertia in the consumer banking industry that arises from the inconvenience of switching banks. Nor did they analyze their service improvement to determine whether it would attract new customers by producing a new standard of service that would excite customers or by proving difficult for competitors to copy. The only merit of the improvement was that it could easily be described to customers.
Q1 :- The primary purpose of the passage is to

(A) contrast possible outcomes of a type of business investment
(B) suggest more careful evaluation of a type of business investment
(C) illustrate various ways in which a type of business investment could fail to enhance revenues
(D) trace the general problems of a company to a certain type of business investment
(E) criticize the way in which managers tend to analyze the costs and benefits of business investments
[Reveal] Spoiler:
B

Q2 :- According to the passage, investments in service are comparable to investments in production and distribution in terms of the

(A) tangibility of the benefits that they tend to confer
(B) increased revenues that they ultimately produce
(C) basis on which they need to be weighed
(D) insufficient analysis that managers devote to them
(E) degree of competitive advantage that they are likely to provide
[Reveal] Spoiler:
C

Q3 :- The passage suggests which of the following about service provided by the regional bank prior to its investment in enhancing that service?

(A) It enabled the bank to retain customers at an acceptable rate
(B) It threatened to weaken the bank’s competitive position with respect to other regional banks
(C) It had already been improved after having caused damage to the bank’s reputation in the past.
(D) It was slightly superior to that of the bank’s regional competitors.
(E) It needed to be improved to attain parity with the service provided by competing banks.
[Reveal] Spoiler:
A

Q4 :- The passage suggests that bank managers failed to consider whether or not the service improvement mentioned in lines 18-20

(A) was too complicated to be easily described to prospective customers
(B) made a measurable change in the experiences of customers in the bank’s offices
(C) could be sustained if the number of customers increased significantly
(D) was an innovation that competing banks could have imitated
(E) was adequate to bring the bank’s general level of service to a level that was comparable with that of its competitors
[Reveal] Spoiler:
D

Q5 :- The discussion of the regional bank (line 13-24) serves which of the following functions within the passage as a whole?

(A) It describes an exceptional case in which investment in service actually failed to produce a competitive advantage.
(B) It illustrates the pitfalls of choosing to invest in service at a time when investment is needed more urgently in another area.
(C) It demonstrates the kind of analysis that managers apply when they choose one kind of service investment over another
(D) It supports the argument that investments in certain aspects of service are more advantageous than investments in other aspects of service.
(E) It provides an example of the point about investment in service made in the first paragraph.
[Reveal] Spoiler:
E

Q6 :- The author uses the word “only” in line 23 most likely in order to
(A) highlight the oddity of the service improvement
(B) emphasize the relatively low value of the investment in service improvement
(C) distinguish the primary attribute of the service improvement from secondary attributes
(D) single out a certain merit of the service improvement from other merits
(E) point out the limited duration of the actual service improvement
[Reveal] Spoiler:
B

[Reveal] Spoiler: Question #1 OA
[Reveal] Spoiler: Question #2 OA
[Reveal] Spoiler: Question #3 OA
[Reveal] Spoiler: Question #4 OA
[Reveal] Spoiler: Question #5 OA
[Reveal] Spoiler: Question #6 OA

Last edited by Narenn on 02 Oct 2013, 10:40, edited 2 times in total.
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29 Dec 2008, 11:59
This OG suppl. passage is such a bastard - I got half of it wrong
Any attempts to explain it would be appreciated.
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09 Apr 2009, 19:32
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10 Apr 2009, 06:57
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Re: The fact that superior service can generate a competitive [#permalink]

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24 Jul 2013, 14:30
For Q 3, first of all tell what is the answer, and then explain where in passage specifically should I go to search out the answer?
For Q 4, please explain why not B?
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Re: The fact that superior service can generate a competitive [#permalink]

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25 Sep 2013, 14:34
Actually found the OA's guys

Here they are:

[Reveal] Spoiler:
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Re: The fact that superior service can generate a competitive [#permalink]

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03 Jun 2014, 07:37
Q3 :- The passage suggests which of the following about service provided by the regional bank prior to its investment in enhancing that service?

(A) It enabled the bank to retain customers at an acceptable rate
(B) It threatened to weaken the bank’s competitive position with respect to other regional banks
(C) It had already been improved after having caused damage to the bank’s reputation in the past.
(D) It was slightly superior to that of the bank’s regional competitors.
(E) It needed to be improved to attain parity with the service provided by competing banks.

Where is A mention in the passage?
It just says the service was easy to describe to the customers...

Q6 :- The author uses the word “only” in line 23 most likely in order to
(A) highlight the oddity of the service improvement
(B) emphasize the relatively low value of the investment in service improvement
(C) distinguish the primary attribute of the service improvement from secondary attributes
(D) single out a certain merit of the service improvement from other merits
(E) point out the limited duration of the actual service improvement

Again, where is it mentioned that the investment was low?
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Re: The fact that superior service can generate a competitive [#permalink]

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08 Jun 2014, 21:05
CCECEB. What is OA, guys?
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Re: The fact that superior service can generate a competitive [#permalink]

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10 Jun 2014, 03:22
I'll give a shot at attempting to explain the answers.

1) C is incorrect because the passage illustrates only ONE WAY in which the investment has failed to generate increased revenues. That leaves B is the correct answer

2) C is the correct answer. Second line of passage. Straightforward.

3) "The bank managers did not recognize the level of customer inertia in the consumer banking industry that arises from the inconvenience of switching banks."
From this statement we can infer that although existing service was inferior to the new service, but the disadvantage in the existing system was not a strong enough motivation for customers to make them consider switching to competitors. So A can be somewhat concluded and is the correct answer as every other option is 100% incorrect.

4) "Nor did they analyze their service improvement to determine whether it would attract new customers by producing a new standard of service that would excite customers or"
B can be concluded to be the correct answer from this statement.

"by proving difficult for competitors to copy"
D can be inferred to be the correct on the basis of this statement.

So In my opinion both B and D can be the correct answers.

5)E is the correct answer. Para 1 talks about reasons why sometimes investment in better services does not yield increased revenues and para 2 gives an example of such a situation.

6) in Para 2 author goes at length to describe various flaws in the decision to make a new investment and closes the passage with a merit of the new investment. Here "only" is used to highlight the difference between the "value of merit" to the "value of demerits"( ability to easily explain to customer is a relatively miniscule advantage when compared to disadvantage of inability of new service to attract new customers). So option B is correct

Option B uses a phrase " relatively low value of the investment", here the word "value" does not refer to the actual MONETARY VALUE of the investment but to the VALUE ADDITION that is brought out due to investment.
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Re: The fact that superior service can generate a competitive [#permalink]

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17 Apr 2015, 05:16
DABBEA
i am so pissed at this passage?
it broke my all correct streak .....
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Re: The fact that superior service can generate a competitive [#permalink]

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02 May 2015, 19:01
I got the second question wrong. The passage says: Investments in service, like those in production and distribution, must be balanced against other types of investments on the basis of direct, tangible benefits such as cost reduction and increased revenues.

The question is: According to the passage, investments in service are comparable to investments in production and distribution in terms of the?

So, why can't A be correct? It says: tangibility of the benefits that they tend to confer.

I am not saying C is incorrect; my question is more about why A is not.
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Re: The fact that superior service can generate a competitive [#permalink]

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03 May 2015, 00:24
saumya12 wrote:
I got the second question wrong. The passage says: Investments in service, like those in production and distribution, must be balanced against other types of investments on the basis of direct, tangible benefits such as cost reduction and increased revenues.

The question is: According to the passage, investments in service are comparable to investments in production and distribution in terms of the?

So, why can't A be correct? It says: tangibility of the benefits that they tend to confer.

I am not saying C is incorrect; my question is more about why A is not.

I think "tangible benefits" can be very different, for example customers start smiling because of new level of service - it's tangible benefit: we can see it, but this benefit shouldn't be taken into account when we make decision about investment. So "tangibility of benefits" can't be a factor in decision about investment. According to the passage only money should be a factor, money is tangible too, but its tangibility is not a focus.
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Re: The fact that superior service can generate a competitive [#permalink]

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04 May 2015, 06:13
Harley1980 wrote:
I think "tangible benefits" can be very different, for example customers start smiling because of new level of service - it's tangible benefit: we can see it, but this benefit shouldn't be taken into account when we make decision about investment. So "tangibility of benefits" can't be a factor in decision about investment. According to the passage only money should be a factor, money is tangible too, but its tangibility is not a focus.

Hello Harley1980, thanks for your response.

I just checked the meaning of "tangible". It says: perceptible by touch.

So, it seems to me that "smiling" would not qualify as tangible benefit.

Also, did you notice by the way, that the word "tangible" is actually used in the passage in this context:

Investments in service, like those in production and distribution, must be balanced against other types of investments on the basis of direct, tangible benefits such as cost reduction and increased revenues.
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Re: The fact that superior service can generate a competitive [#permalink]

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04 May 2015, 06:33
saumya12 wrote:
Harley1980 wrote:
I think "tangible benefits" can be very different, for example customers start smiling because of new level of service - it's tangible benefit: we can see it, but this benefit shouldn't be taken into account when we make decision about investment. So "tangibility of benefits" can't be a factor in decision about investment. According to the passage only money should be a factor, money is tangible too, but its tangibility is not a focus.

Hello Harley1980, thanks for your response.

I just checked the meaning of "tangible". It says: perceptible by touch.

So, it seems to me that "smiling" would not qualify as tangible benefit.

Also, did you notice by the way, that the word "tangible" is actually used in the passage in this context:

Investments in service, like those in production and distribution, must be balanced against other types of investments on the basis of direct, tangible benefits such as cost reduction and increased revenues.

Hello saumya12
According to the Oxford dictionary there is one more meaning: "clear and definite; real".
And I think meaning about perception is not applicable in this context, because one can't touch "cost reduction".
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Re: The fact that superior service can generate a competitive [#permalink]

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04 May 2015, 19:24
Harley1980 wrote:
Hello saumya12
According to the Oxford dictionary there is one more meaning: "clear and definite; real".
And I think meaning about perception is not applicable in this context, because one can't touch "cost reduction".

Sure, and even by this definition, "smiling" would not qualify as "tangible". If that "smile" further results in greater customer retention etc. that would be a tangible benefit.

I somehow think there is something more fundamental going on here. Something very basic that we are missing.
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The fact that superior service can generate a competitive [#permalink]

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14 Aug 2015, 09:38
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According to the passage, investments in service are comparable to investments in production and distribution in terms of the
(A) tangibility of the benefits that they tend to confer
(B) increased revenues that they ultimately produce
(C) basis on which they need to be weighed
>>Investments in service, like those in production and distribution, must be balanced against other types of investments on the basis of direct, tangible benefits such as
A & B answers just part of it.

cost reduction and increased revenues.
(D) insufficient analysis that managers devote to them
(E) degree of competitive advantage that they are likely to provide

Q4 :- The passage suggests that bank managers failed to consider whether or not the service improvement mentioned in lines 18-20
The bank managers did not recognize
1: the level of customer inertia in the consumer banking industry that arises from the inconvenience of switching banks.
2: it would attract new customers by producing a new standard of service that would excite customers
3: by proving difficult for competitors to copy.

(A) was too complicated to be easily described to prospective customers
(B) made a measurable change in the experiences of customers in the bank’s offices
>> Got tricked by this. But look at marked words. It mentions abt new customer.
(C) could be sustained if the number of customers increased significantly
(D) was an innovation that competing banks could have imitated
(E) was adequate to bring the bank’s general level of service to a level that was comparable with that of its competitors
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Re: The fact that superior service can generate a competitive [#permalink]

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21 Sep 2015, 19:39
1B,2A (Incorrect),3A,4D,5E,6B
Time =5minutes 26 seconds
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Re: The fact that superior service can generate a competitive [#permalink]

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21 Sep 2015, 19:47
Hello JarvisR,
Line 24 states :"The only merit of the improvement was that it could easily be described to customers."
From this ,it can be inferred that there was no other benefit to the bank.If you read the previous line they talk about the service failed to provide any benefits to the bank.
Now look at the options :

(A) highlight the oddity of the service improvement
(B) emphasize the relatively low value of the investment in service improvement
(C) distinguish the primary attribute of the service improvement from secondary attributes
(D) single out a certain merit of the service improvement from other merits
(E) point out the limited duration of the actual service improvement

Option A :There was no service improvement So it is incorrect
Option B: Correct ,since there was no gain to bank .
Option C: there is no mention of primary /secondary attributes
Option D: No improvement in service
Option E: Out of Scope. Passage does not mentions the duration.

JarvisR wrote:

According to the passage, investments in service are comparable to investments in production and distribution in terms of the
(A) tangibility of the benefits that they tend to confer
(B) increased revenues that they ultimately produce
(C) basis on which they need to be weighed
>>Investments in service, like those in production and distribution, must be balanced against other types of investments on the basis of direct, tangible benefits such as
A & B answers just part of it.

cost reduction and increased revenues.
(D) insufficient analysis that managers devote to them
(E) degree of competitive advantage that they are likely to provide

Q4 :- The passage suggests that bank managers failed to consider whether or not the service improvement mentioned in lines 18-20
The bank managers did not recognize
1: the level of customer inertia in the consumer banking industry that arises from the inconvenience of switching banks.
2: it would attract new customers by producing a new standard of service that would excite customers
3: by proving difficult for competitors to copy.

(A) was too complicated to be easily described to prospective customers
(B) made a measurable change in the experiences of customers in the bank’s offices
>> Got tricked by this. But look at marked words. It mentions abt new customer.
(C) could be sustained if the number of customers increased significantly
(D) was an innovation that competing banks could have imitated
(E) was adequate to bring the bank’s general level of service to a level that was comparable with that of its competitors

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Re: The fact that superior service can generate a competitive [#permalink]

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24 Sep 2015, 06:01
Q3 :- The passage suggests which of the following about service provided by the regional bank prior to its investment in enhancing that service?

(A) It enabled the bank to retain customers at an acceptable rate
(B) It threatened to weaken the bank’s competitive position with respect to other regional banks
(C) It had already been improved after having caused damage to the bank’s reputation in the past.
(D) It was slightly superior to that of the bank’s regional competitors.
(E) It needed to be improved to attain parity with the service provided by competing banks.

No clues for this question !! Anyone please explain ...

A & B both are close.

I chose B since to maintain / improve competitive position of the bank management invested in that service.
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Re: The fact that superior service can generate a competitive [#permalink]

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24 Sep 2015, 22:51
Hello Rudranket,

Look at the below lines from the passage :
The only merit of the improvement was that it could easily be described to customers.

Now look at the question:
The passage suggests which of the following about service provided by the regional bank prior to its investment in enhancing that service?

The passage clearly says there was no improvement to the existing service level or it helped in adding new customers better then earlier. So we can derive that the existing service was good enough to attract the customers.

(A) It enabled the bank to retain customers at an acceptable rate
(B) It threatened to weaken the bank’s competitive position with respect to other regional banks

Option A re-iterates the same position. Hence it is the correct answer.
Let me know if you have any further doubts.
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Re: The fact that superior service can generate a competitive   [#permalink] 24 Sep 2015, 22:51

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