Last visit was: 23 May 2024, 11:55 It is currently 23 May 2024, 11:55
Toolkit
GMAT Club Daily Prep
Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History
Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

# Established companies concentrate on defending what they already have.

SORT BY:
Tags:
Show Tags
Hide Tags
Board of Directors
Joined: 01 Sep 2010
Posts: 4461
Own Kudos [?]: 33114 [117]
Given Kudos: 4484
GMAT Club Legend
Joined: 03 Oct 2013
Affiliations: CrackVerbal
Posts: 4940
Own Kudos [?]: 7680 [10]
Given Kudos: 216
Location: India
General Discussion
Manager
Joined: 25 Jul 2015
Posts: 104
Own Kudos [?]: 491 [4]
Given Kudos: 52
Location: Thailand
Concentration: Entrepreneurship, Marketing
GMAT 1: 550 Q37 V28
GMAT 2: 660 Q47 V34
GMAT 3: 650 Q44 V35
GMAT 4: 680 Q49 V32
GMAT 5: 740 Q49 V42
GPA: 3.33
Intern
Joined: 14 Jul 2016
Posts: 38
Own Kudos [?]: 38 [1]
Given Kudos: 17
Location: India
Concentration: Strategy, Marketing
Schools: AGSM '20 (A)
GMAT 1: 650 Q48 V31
GPA: 3.5
WE:Analyst (Computer Software)
1
Kudos
carcass wrote:
Which of the following best completes the passage below?

Established companies concentrate on defending what they already have. Consequently, they tend not to be innovative themselves and tend to underestimate the effects of the innovations of others. The clearest example of this defensive strategy is the fact that___.

A. ballpoint pens and soft-tip markers have eliminated the traditional market for fountain pens, clearing the way for the marketing of fountain pens as luxury or prestige items
B. a highly successful automobile was introduced by the same company that had earlier introduced a model that had been a dismal failure
C. a once-successful manufacturer of slide rules reacted to the introduction of electronic calculators by trying to make better slide rules
D. one of the first models of modern accounting machines, designed for use in the banking industry, was purchased by a public library as well as by banks
E. the inventor of a commonly used anesthetic did not intend the product to be used by dentists, who currently account for almost the entire market for that drug.

Choice C correctly says that the manufacturer was defending the already existing slide rules without innovating.
Director
Joined: 12 Nov 2016
Posts: 569
Own Kudos [?]: 118 [0]
Given Kudos: 167
Location: United States
Schools: Yale '18
GMAT 1: 650 Q43 V37
GRE 1: Q157 V158
GPA: 2.66
carcass wrote:
Which of the following best completes the passage below?

Established companies concentrate on defending what they already have. Consequently, they tend not to be innovative themselves and tend to underestimate the effects of the innovations of others. The clearest example of this defensive strategy is the fact that __________.

(A) ballpoint pens and soft-tip markers have eliminated the traditional market for fountain pens, clearing the way for the marketing of fountain pens as luxury or prestige items

(B) a highly successful automobile was introduced by the same company that had earlier introduced a model that had been a dismal failure

(C) a once-successful manufacturer of slide rules reacted to the introduction of electronic calculators by trying to make better slide rules

(D) one of the first models of modern accounting machines, designed for use in the banking industry, was purchased by a public library as well as by banks

(E) the inventor of a commonly used anesthetic did not intend the product to be used by dentists, who currently account for almost the entire market for that drug

C illustrates the strategy described in the syllabus more precisely than A. A simply suggests that a product has become antiquated- but "B" is more accurate because a "once-successful" implicitly lost business because it tried to make more of the same product.
VP
Joined: 11 Aug 2020
Posts: 1258
Own Kudos [?]: 203 [1]
Given Kudos: 332
1
Kudos
Which of the following best completes the passage below?

In essence, the passage argues that established companies tend to lean on the conservative side. These companies don’t really innovate and underestimate the effects of innovations – a defensive as opposed to offensive/aggressive strategy. The last sentence indicates we need an example that shows this conservative mindset.

Established companies concentrate on defending what they already have. Consequently, they tend not to be innovative themselves and tend to underestimate the effects of the innovations of others. The clearest example of this defensive strategy is the fact that __________.

(A) ballpoint pens and soft-tip markers have eliminated the traditional market for fountain pens, clearing the way for the marketing of fountain pens as luxury or prestige items X
-the elimination of a traditional, presumably established, market for fountain pens and “clearing the way for the marketing of fountain pens as luxury items” is certainly not conservative. This is a move towards innovation/expanding upon old ways of doing things.

(B) a highly successful automobile was introduced by the same company that had earlier introduced a model that had been a dismal failure X
-Experimentation is a sign of a desire to innovate… out

(C) a once-successful manufacturer of slide rules reacted to the introduction of electronic calculators by trying to make better slide rules
Correct. The ‘once-successful’ meaning previously established (but not anymore) manufacturer is an example of a company that got caught with their pants down when other companies innovated and are now succeeding.

(D) one of the first models of modern accounting machines, designed for use in the banking industry, was purchased by a public library as well as by banks X
-no…the public library is clearly not being conservative…not afraid to venture out

(E) the inventor of a commonly used anesthetic did not intend the product to be used by dentists, who currently account for almost the entire market for that drug
-Does not capture the essence of a defensive strategy…out
Manager
Joined: 14 May 2020
Posts: 121
Own Kudos [?]: 48 [0]
Given Kudos: 180
Location: India
Concentration: Operations, General Management
Schools: IIMA PGPX'23
GMAT 1: 640 Q49 V27
GPA: 4
WE:Engineering (Manufacturing)
Hey Experts,

In my process of elimination, I was stuck between A & C; Could you please share your 2 cents on why A is not the correct answer ?
Intern
Joined: 06 Jun 2018
Posts: 23
Own Kudos [?]: 13 [0]
Given Kudos: 667
Option A:
There is no established company here nor a strategy that the established company employed.
These are basically new products replacing old products in the industry and thus old products (fountain pens) automatically becoming luxury item.
Intern
Joined: 10 Jan 2021
Posts: 5
Own Kudos [?]: 2 [1]
Given Kudos: 221
1
Bookmarks
GMATNinja MartyTargetTestPrep AndrewN

The stimulus says that the established companies defend what they have, choose not to innovate, and tend to undermine the innovations of others. Option A satisfies all these three characteristics.

The fountain pen companies kept losing market share (traditional market) to the newcomers and did not come up with a new product. Eventually they just kept what they had and were left with a smaller market

This satisfies all the conditions and should've been the answer, as against option C where we have the following flaws.

The slide ruler company felt the threat with the electronic calculators and decided to take action (by building better versions of their slide rulers). They did not simply defend their then products by underestimating the competition unlike the fountain pen company which did nothing whatsoever.

How is C the correct answer?

Posted from my mobile device
Volunteer Expert
Joined: 16 May 2019
Posts: 3512
Own Kudos [?]: 6901 [0]
Given Kudos: 500
Shreya00 wrote:
GMATNinja MartyTargetTestPrep AndrewN

The stimulus says that the established companies defend what they have, choose not to innovate, and tend to undermine the innovations of others. Option A satisfies all these three characteristics.

The fountain pen companies kept losing market share (traditional market) to the newcomers and did not come up with a new product. Eventually they just kept what they had and were left with a smaller market

This satisfies all the conditions and should've been the answer, as against option C where we have the following flaws.

The slide ruler company felt the threat with the electronic calculators and decided to take action (by building better versions of their slide rulers). They did not simply defend their then products by underestimating the competition unlike the fountain pen company which did nothing whatsoever.

How is C the correct answer?

Hello, Shreya00. I would like to start prefacing my responses to questions with proof, whenever possible, of my own result so that my words might carry more weight. Right or wrong, I would like everyone to be able to see where I am coming from.

Show SpoilerTimer Stats (24 November 2021)
Attachment:

Screen Shot 2022-06-30 at 19.25.04.png [ 56.36 KiB | Viewed 11479 times ]

The problem I see with answer choice (A) is that there is not really any evidence that fountain pen companies ever {concentrated} on defending what they already {had} once ballpoint pens and soft-tip markers began to gain ground in the pen market. In fact, there is no evidence that the fountain pen companies did anything at all except think of a way to market fountain pens after the tide had already turned. We cannot read into the lack of information to deduce that {doing} nothing whatsoever, to use your own words, is akin to a defensive strategy that entails {underestimating} the effects of the innovations of others.

Answer choice (C) is fitting because it tells us that the once-successful slide rule manufacturers reacted to a competing product as soon as that product was introduced. How did they react? By manufacturing the same product, demonstrating a lack of innovation, and presumably banking on people choosing to purchase an established but better or improved product over one that was more innovative. If such a strategy was intended to be a solution for the slide rule manufacturers, then yes, we can say that they underestimated the competition, because once-successful implies no longer successful. The losing strategy is what we were missing in (A).

You may feel free to disagree. I look forward to seeing what other responses you receive. Thank you for asking for my input.

- Andrew
Senior Manager
Joined: 12 Mar 2013
Posts: 289
Own Kudos [?]: 611 [0]
Given Kudos: 1063
AndrewN wrote:
Shreya00 wrote:
GMATNinja MartyTargetTestPrep AndrewN

The stimulus says that the established companies defend what they have, choose not to innovate, and tend to undermine the innovations of others. Option A satisfies all these three characteristics.

The fountain pen companies kept losing market share (traditional market) to the newcomers and did not come up with a new product. Eventually they just kept what they had and were left with a smaller market

This satisfies all the conditions and should've been the answer, as against option C where we have the following flaws.

The slide ruler company felt the threat with the electronic calculators and decided to take action (by building better versions of their slide rulers). They did not simply defend their then products by underestimating the competition unlike the fountain pen company which did nothing whatsoever.

How is C the correct answer?

Hello, Shreya00. I would like to start prefacing my responses to questions with proof, whenever possible, of my own result so that my words might carry more weight. Right or wrong, I would like everyone to be able to see where I am coming from.

Show SpoilerTimer Stats (24 November 2021)
Attachment:
Screen Shot 2022-06-30 at 19.25.04.png

The problem I see with answer choice (A) is that there is not really any evidence that fountain pen companies ever {concentrated} on defending what they already {had} once ballpoint pens and soft-tip markers began to gain ground in the pen market. In fact, there is no evidence that the fountain pen companies did anything at all except think of a way to market fountain pens after the tide had already turned. We cannot read into the lack of information to deduce that {doing} nothing whatsoever, to use your own words, is akin to a defensive strategy that entails {underestimating} the effects of the innovations of others.

Answer choice (C) is fitting because it tells us that the once-successful slide rule manufacturers reacted to a competing product as soon as that product was introduced. How did they react? By manufacturing the same product, demonstrating a lack of innovation, and presumably banking on people choosing to purchase an established but better or improved product over one that was more innovative. If such a strategy was intended to be a solution for the slide rule manufacturers, then yes, we can say that they underestimated the competition, because once-successful implies no longer successful. The losing strategy is what we were missing in (A).

You may feel free to disagree. I look forward to seeing what other responses you receive. Thank you for asking for my input.

- Andrew

Thank you AndrewN for your detailed explanation.
But unfortunately, I am still confused with "better slide rules"
If I try to make something better do I not need to develop some new ideas.
Or does innovation means something new completely ignoring the old?
Thanks again.
Senior Manager
Joined: 23 Dec 2022
Posts: 316
Own Kudos [?]: 35 [0]
Given Kudos: 199
The passage discusses how established companies focus on defending their existing products or services, which leads to a lack of innovation and underestimating the impact of others' innovations. To complete the passage, we need to provide an example that exemplifies this defensive strategy. Let's evaluate each option:

A. The fact that ballpoint pens and soft-tip markers have eliminated the traditional market for fountain pens, allowing fountain pens to be marketed as luxury or prestige items, does not directly relate to established companies defending what they already have. It provides an example of a shift in the market but does not illustrate the defensive strategy mentioned in the passage.

B. This option mentions the introduction of a highly successful automobile by a company that had previously released a failed model. While it demonstrates a company's ability to rebound from failure, it does not specifically relate to the defensive strategy of established companies or their underestimation of others' innovations.

C. The fact that a once-successful slide rule manufacturer responded to the introduction of electronic calculators by trying to make better slide rules aligns with the defensive strategy mentioned in the passage. It demonstrates the company's focus on improving an existing product rather than embracing a new technology. This option provides a clear example of the defensive strategy.

D. The purchase of an accounting machine by a public library in addition to banks does not directly support the idea of established companies defending what they already have or underestimating others' innovations. It mentions a purchase decision but does not provide evidence of the defensive strategy discussed in the passage.

E. The fact that the inventor of a commonly used anesthetic did not intend the product to be used by dentists, who now dominate the market, does not directly relate to the defensive strategy of established companies. It mentions a product's unintended usage, but it does not illustrate the defensive strategy described in the passage.

Based on the analysis, option C, "a once-successful manufacturer of slide rules reacted to the introduction of electronic calculators by trying to make better slide rules," best completes the passage by providing an example that aligns with the defensive strategy of established companies mentioned in the passage.