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655-705 Level|   Business|   Long Passage|               
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Took 8 mins , including 2 mins 50 seconds to read .
Was not sure about first answer and finally got it wrong :(

-The author talks about how IT was perceived in a certain light earlier
-He then introduces the views of some economists who believe that IT investments are not related to productivity
-The author then provides explanations for the “productivity paradox”
1. The passage is primarily concerned with …
The Key Takeaways clearly suggest that option (C ) is the right answer choice.

2. The passage suggests..
“According to a recent study of retail firms, which confirmed that IT has become pervasive and relatively easy to acquire"
The above excerpt clearly suggests that IT had become commonplace and was easy to acquire thereby making it a resource that is not difficult to obtain. Hence option (A) is the right answer choice.

3. The author of the passage..
“But toward the end of the 1980’s, some economists spoke of a ―productivity paradox: despite huge IT investments, most notably in the service sectors, productivity stagnated. In the retail industry, for example, in which IT had been widely adopted during the 1980’s "
The author is using the retail industry example to illustrate the productivity paradox he talks about. Hence option (B) is the right answer choice.

4. According to the passage..
“Most pre-1990 literature on businesses’ use of information technology (IT)—defined as any form of computer based information system—focused on spectacular IT successes and reflected a general optimism concerning IT’s potential as a resource for creating competitive advantage"

Option (E) is a clear word justification of the above excerpt and is hence the right answer choice.
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1)Unexpected finding is demonstrated with the help of percentage 1.1% B/w 1973 and 1989 vs previous 2.4% in the preceding 25 years period.Resolving is just way too distorting, ultimately author hasn't described things in resolving tone. Moreover, this is passage is neither opinionated nor detailed, it is providing clear cut explanation. Hence C is correct.
2)option B says exactly opposite of what is stated."But some observers questioned why, if IT had conferred economic value, it did not produce direct competitive advantages for individual firms. Resource-based theory offers an answer, asserting that, in general, firms gain competitive advantages by accumulating resources that are economically valuable, relatively scarce, and not easily replicated. According to a recent study of retail firms, which confirmed that IT has become pervasive and relatively easy to acquire, IT by itself appeared to have conferred little advantage". Hence A is correct and option B is wrong.
3)“But toward the end of the 1980’s, some economists spoke of a ―productivity paradox: despite huge IT investments, most notably in the service sectors, productivity stagnated. In the retail industry, for example, in which IT had been widely adopted during the 1980’s ". The author is using the retail industry example to illustrate the productivity paradox he talks about. Hence option (B) is the right answer choice.
4)“Most pre-1990 literature on businesses’ use of information technology (IT)—defined as any form of computer based information system—focused on spectacular IT successes and reflected a general optimism concerning IT’s potential as a resource for creating competitive advantage". Option (E) is a clear word justification of the above excerpt and is hence the right answer choice.
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Hi mikemcgarry , daagh ,

Could you please explain me the answer choice of the first question ?

I chose option A as the answer.
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Hi, I still don't get why answer C is true in Question 1. Passage clearly defines old belief -> paradox -> proponent of old belief -> why paradox -> resource based theory explain. Answer E clearly shows that passage resolves disagreement. Answer C has words "unexpected findings". What ARE findings in this passage? and where passage shows unexpected? Please help to clarify. Thanks
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mikemcgarry,

I am unable to understand how option A is the answer for question no 2?

From this statement towards the end of passage: "The findings support the notion, founded in resource-based theory, that competitive advantages do not arise from easily replicated resources, no matter how impressive or economically valuable they may be, but from complex, intangible resources." I inferred that option C was the answer.

I see that few of them have quoted this from the passage: "According to a recent study of retail firms, which confirmed that IT has become pervasive and relatively easy to acquire". How does this relate to resource based theory? Also, in the statement just before the one I stated talks about resource theory but I feel that also bends toward option c.

Please correct me.

Thanks!
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Passage map
Topic: Discuss IT as source of competitive adv.
p1: To state the productivity contention of IT as source of competitive adv.
p2: Discuss explanations for contention - resource view/ other views
General tone (purpose): Explain (= neutral) but towards the end it seems as if the author states his opinion (a deduction from the findings)

Question 1- Main Idea/Purpose
A - Incorrect. IT is discussed, but methods used to study it aren't
B - No theory is presented. IT was generally accepted as a source of competitive advantage, but as time went on the perspective changed.
C - Correct. The unexpected finding is the productivity contention - productivity stagnated. This is introduced in P1 then reasons for its occurrence are discussed in P2
D - No. No theory is discussed and nothing of the sort leads the reader to believe something is unfounded. The productivity paradox is just unexpected.
E - No disagreement. No deal. Incorrect

Question 2- Inference
Answer found in P2: "Resource-based theory offers an answer, asserting that, in general, firms gain competitive advantages by accumulating resources that are economically valuable, relatively scarce, and not easily replicated"

So resource based theory says firms gain competitive advantage from scarcity but the next sentence mentions that IT had become "pervasive" meaning in abundance.

A - Correct. If everyone has it, it's not hard to obtain. Thus according to RBT it must be abundant.
B - Incorrect. RBT doesn't support this. RBT discusses scarcity as a source of competitive advantage.
C - Cant be supported.
D - Cant be supported
E - We know that productivity can be measured in aggregate, but this answer says it can't.... (productivity is a macroeconomic measure). Incorrect

Question 3- Inference
B - quite clearly to give an example of the paradox as the paradox is mentioned and then the retail industry is mentioned straight after.

Question 4- Detail
Answer contained in first sentence of P1
Overall the literature was generally positive and optimistic about IT as a source of competitive advantage.
E - Correctly captures this sentiment.
A - Incorrect. We don't know it would contain recommendations - too specific here..
B - IT was far too immature for literature to discuss advantages and disadvantages and we are told the sentiment is "positive"
C - No. Human resources is mentioned in P2 to discuss one domain that later proved successful (When other domains couldn't) - this came about much later than the literature.
D - No. The text was positive, nothing negative.
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Question 3: We all know that the example is for paradox
However, there is 1 contender: E: counter the argument that IT could potentially create competitive advantage
-> This is also true

Is that just because B is more direct, so it's winner here?

Thank you :)
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Could you please explain question 6 here?
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Question #6


simran2505
Could you please explain question 6 here?
Lots of discussion of question #6, but we'll add our two cents in case it's useful. :)

Quote:
6. The passage suggests that the recent study of retail firms discussed in the second paragraph supports which of the following conclusions regarding a firm's competitive advantage?
To answer this question, let's first go back to the passage to see what it says about the study:

    "According to a recent study of retail firms, which confirmed that IT has become pervasive and relatively easy to acquire, IT by itself appeared to have conferred little advantage. In fact, though little evidence of any direct effect was found, the frequent negative correlations between IT and performance suggested that IT had probably weakened some firms' competitive positions. However, firms' human resources, in and of themselves, did explain improved performance, and some firms gained IT-related advantages by merging IT with complementary resources, particularly human resources."

From this we know that:

    1) IT by itself didn't result in a competitive advantage, and in fact may have worsened some firms' competitive positions
    2) Human resources by themselves DID explain improved performance
    3) By combining IT and human resources, some firms gained an advantage

So, which answer choice aligns with this information?

Quote:
A. Human resources alone are more likely to contribute to competitive advantage than is IT alone.
This one looks good! Human resources by themselves DID explain improved performance, while IT alone did not. From this, we can say that human resources alone were more likely to lead to competitive advantage than IT alone.

Keep (A), and let's look at the other options.

Quote:
B. Human resources combined with IT are more likely than human resources alone to have a negative effect on competitive advantage.
We know that some firms gained a competitive advantage by combining IT and HR. We also know that HR alone provided an advantage.

The passage says good things about both of these options, but doesn't provide a clear comparison between the two -- we don't know how often either option led to negative effects on competitive advantage.

Because of this, we can rule out (B).

Quote:
C. Human resources combined with IT often have a negative effect on competitive advantage.
Nope! We know that some firms gained a competitive advantage by combining IT and HR. The study doesn't suggest in any way that this combination led to a negative effect on competitive advantage.

Eliminate (C).

Quote:
D. IT by itself is much more likely to have a positive effect than a negative effect on competitive advantage.
The study actually suggests the opposite of (C) -- IT alone "conferred little advantage," and actually sometimes WORSENED a firm's competitive advantage.

(D) is out.

Quote:
E. The positive effect of IT on competitive advantage increases with time.
Hmm, the study doesn't mention any changes of competitive advantage with time. Instead, the study just says that IT can have a positive effect when combined with other complementary resources, such as HR.

(E) is out, and (A) is the answer to question #6.

I hope that helps!
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bm2201 @SajjadAhmad- Dear Sir- I took 13 minutes to read this passage, which has 8 Q. I got only 1 wrong.
Is this time ok to read the RC passage since I am thinking that 2 mins per Q means I had 16 minutes with me but I managed to do it in 13 minute.
Let me know if thinking this is ok or should I reduce my time drastically to get a good score. Thanks in advance.
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Gauriii
bm2201 @SajjadAhmad- Dear Sir- I took 13 minutes to read this passage, which has 8 Q. I got only 1 wrong.
Is this time ok to read the RC passage since I am thinking that 2 mins per Q means I had 16 minutes with me but I managed to do it in 13 minute.
Let me know if thinking this is ok or should I reduce my time drastically to get a good score. Thanks in advance.

Hello Gauriii

RC is the most cruel section of the GMAT verbal I think and SC is the most kind. You can save time from SC questions and can invest that time in the RC section. CR is in between the both. So 13 minutes is excellent time for 8 questions. Even 15-16 minutes is fine for this RC passage with the medium difficulty level. Reducing your time drastically means you will not catch up 100% of the RC passage and the result could be havoc so don't go to gimmicks instead hold your natural pace.

Good Luck
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Any explanation for Q5 ? Didn't find any in above comments.

I was confused between D and E. Even though I chose right, but I ain't sure how to reject D as it seems pretty close too.
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Question 5


Saasingh
Any explanation for Q5 ? Didn't find any in above comments.

I was confused between D and E. Even though I chose right, but I ain't sure how to reject D as it seems pretty close too.
Let’s think about the author’s purpose throughout the first paragraph:

  • First, the author introduces IT and describes the typical pro-IT approach in pre-1990 literature.
  • Then, he/she describes an alternative, less-optimistic view (anti-IT) on the impact of IT and gives an example.
  • Finally, the author describes the response of the pro-IT group to the anti-IT group.

With that in mind, the question asks that we identify an answer choice describing the content of the first paragraph. Here’s (D):

Quote:
(D) It demonstrates the effect IT has had on productivity.
The biggest problem with (D) is that the first paragraph does NOT demonstrate the effect of IT on productivity. Rather, it debates the effect of IT on productivity. For the paragraph to demonstrate IT’s effect on productivity, it would have to show what effect IT has. But the paragraph does not show the impact of IT. Instead, it introduces a debate on what impact IT has had. This is different than actually demonstrating or showing the impact. And the first paragraph does not show what impact IT ACTUALLY had. It merely discusses what effect IT MAY have had. Eliminate (D).

I hope that helps!
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Hi GMATNinja AndrewN sir
I am trying to figure out the difference between retail firms mention in 1st para vs retail firms mention in 2nd para. Please check my understanding.

Para1 : The passage talks about overall in general about retail firms from preceding 25 years of 1980s till 1990.
1. During this period, retail firms had gained competitive advantages
2. Favored by some economists and Resource-based theorists
3. author shows positive side


Para2: The passage talks about study of individual recent retails firms ( another perspective) especially of those some firms whose competitive positions is weakened
1. individual retail firms appeared to have conferred little advantage and even negative effect as per relationship suggested between IT and performance.
2: negative by some observers
3. author shows negative side


In the end author just displays both views: +ve side in 1st para and 2nd para who were against with perspective in 1st view
The author concludes that competitive advantages come from complex, intangible resources not from rom easily replicated resources.

Questions:
Is my understanding correct?
Please check bold words ? Are they correct or I missed something?
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imSKR
Hi GMATNinja AndrewN sir
I am trying to figure out the difference between retail firms mention in 1st para vs retail firms mention in 2nd para. Please check my understanding.

Para1 : The passage talks about overall in general about retail firms from preceding 25 years of 1980s till 1990.
1. During this period, retail firms had gained competitive advantages
2. Favored by some economists and Resource-based theorists
3. author shows positive side


Para2: The passage talks about study of individual recent retails firms ( another perspective) especially of those some firms whose competitive positions is weakened
1. individual retail firms appeared to have conferred little advantage and even negative effect as per relationship suggested between IT and performance.
2: negative by some observers
3. author shows negative side


In the end author just displays both views: +ve side in 1st para and 2nd para who were against with perspective in 1st view
The author concludes that competitive advantages come from complex, intangible resources not from rom easily replicated resources.

Questions:
Is my understanding correct?
Please check bold words ? Are they correct or I missed something?
I think you have it, imSKR. In the end, the passage (author) seems to favor an alternative explanation for the competitive advantages mentioned earlier, namely that human resources add a major component to the equation. The penultimate line tells us as much:

[F]irms' human resources, in and of themselves, did explain improved performance, and some firms gained IT-related advantages by merging IT with complementary resources, particularly human resources

It is this complex interaction between human resources and technology that the author stands behind.

Well done with your reading. Did you answer the questions correctly?

- Andrew
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Dear Experts,

8. According to the passage, the recent study of retail firms discussed in the second paragraph (lines 33???63) best supports which of the following assessments of IT's potential?

A. Even when IT gives a firm a temporary competitive advantage, that firm is unlikely to continue to achieve productivity gains.
B. The competitive advantages conferred by a firm's introduction of IT are outweighed by IT's development costs.
C. A firm's introduction of IT is less likely to limit its ability to achieve productivity gains than to enhance that ability.
D. Although IT by itself is unlikely to give a firm a competitive advantage, IT combined with other resources may do so.
E. Although IT by itself is unlikely to give a firm a competitive advantage, a firm that does not employ IT cannot achieve a competitive advantage.

From the passage :
"According to a recent study of retail firms, which confirmed that IT has become pervasive and relatively easy to acquire, IT by itself appeared to have conferred little advantage."

IT by itself appeared to
have conferred little advantage

>>>(A) Even when IT gives a firm a temporary competitive advantage, that firm is unlikely to continue to achieve productivity gains.

Why A is wrong.
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Question 8


Tanchat
Dear Experts,

8. According to the passage, the recent study of retail firms discussed in the second paragraph (lines 33???63) best supports which of the following assessments of IT's potential?

A. Even when IT gives a firm a temporary competitive advantage, that firm is unlikely to continue to achieve productivity gains.
B. The competitive advantages conferred by a firm's introduction of IT are outweighed by IT's development costs.
C. A firm's introduction of IT is less likely to limit its ability to achieve productivity gains than to enhance that ability.
D. Although IT by itself is unlikely to give a firm a competitive advantage, IT combined with other resources may do so.
E. Although IT by itself is unlikely to give a firm a competitive advantage, a firm that does not employ IT cannot achieve a competitive advantage.

From the passage :
"According to a recent study of retail firms, which confirmed that IT has become pervasive and relatively easy to acquire, IT by itself appeared to have conferred little advantage."

IT by itself appeared to
have conferred little advantage

>>>(A) Even when IT gives a firm a temporary competitive advantage, that firm is unlikely to continue to achieve productivity gains.

Why A is wrong.
Let's start by considering the main points of the second paragraph:

  • Some observers raised this question: if IT conferred economic value, why did it fail to produce "direct competitive advantages"?
  • One explanation is that competitive advantages arise from accumulating "scarce" resources that are hard to acquire. Since IT is neither scarce nor hard to acquire, it should not confer a competitive advantage on its own.
  • The above explanation is supported with an example -- specifically, while IT alone did not confer a competitive advantage, some firms did gain a competitive advantage when they merged IT with complementary resources such as human resources.

Let's now consider Question 8:

Quote:
8. According to the passage, the recent study of retail firms discussed in the second paragraph (lines 33–63) best supports which of the following assessments of IT's potential?

A. Even when IT gives a firm a temporary competitive advantage, that firm is unlikely to continue to achieve productivity gains.
The study described in the second paragraph supports the idea that IT on its own did NOT confer a competitive advantage -- not even a temporary one. Eliminate (A).

Quote:
D. Although IT by itself is unlikely to give a firm a competitive advantage, IT combined with other resources may do so.
The passage tells us that when IT was merged with "complementary resources" like "human resources," it conferred a competitive advantage. Since (D) lines up with this fact, it's correct.

I hope that helps!
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