Established companies concentrate on defending what they already have.

Question

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

CrackverbalGMAT · Accepted Answer

three things that established companies do - 
1. Concentrate on defending what they have.
2. Not innovative 
3. Underestimate the effects of others' innovations.

the correct answer must parallel the reasoning above-

Option A - Incorrect.
Innovation need not necessarily be coming up with a ground-breaking product. It can also be through innovative marketing and positioning the product.
Hence, this does not agree with point #2.

Option B - Incorrect.
No comparison between the company's products to an innovative product from competitors. 
Highly successful does not mean that the company was not innovative. 
Hence, this does not agree with points #2.

Option C - Correct Answer.
trying to make better slide rules (Point #1).
not innovative because they did not introduce new technologies but defended the old one. 
By doing this, they underestimated the effects of others innovations. Hence, they were no longer successful(point #3).

Option D - Incorrect.
does not address any of the three points.

Option E - Incorrect.
does not address any of the three points.

Mimster · Answer

A. clearly an opposite example, it is not a defensive strategy
B. irrelevant - does not follow the same line of reasoning of competitor vs. competitor
 C.   correct  - shows competitor (new electronic calculator) vs. competitor (slide ruler) example
D. irrelevant - it's competitor vs. competitor, banking and public library is a bit too far-fetched to be competitors.
E. irrelevant - it's competitor vs. competitor

dnalost · Answer

Choice C correctly says that the manufacturer was defending the already existing slide rules without innovating.

Nunuboy1994 · Answer

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.

CEdward · Answer

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

aarkay87 · Answer

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 ?

sriharsha4444 · Answer

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.

Shreya00 · Answer

GMATNinja   MartyTargetTestPrep   AndrewN

Could you please help on this one? I am unable to understand why C is the correct answer.

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

AndrewN · 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. 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

nahid78 · Answer

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.

ArnauG · Answer

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.

VerbalBot · Answer

Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.

Established companies concentrate on defending what they already have.

Prep Toolkit

Top 5 GMAT Debrief Videos

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards

GMAT Critical Reasoning (CR) Questions

Established companies concentrate on defending what they already have.

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards