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Please help in AWA

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Author Message
Intern
Intern
User avatar
S
Joined: 03 Jul 2018
Posts: 38
Location: India
GMAT 1: 560 Q47 V28
GMAT 2: 560 Q47 V28
GMAT 3: 560 Q47 V28
GMAT 4: 560 Q47 V28
GPA: 3.88
CAT Tests
Please help in AWA  [#permalink]

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New post 06 Aug 2018, 08:51
1
The Easy Credit Company would gain an advantage over competing credit card services if we were to donate a portion of the proceeds from the use of our cards to a well-known environmental Organizations in exchange for the use of its symbol or logo on our card. Since a recent poll shows that a large percentage of the public is concerned about environmental issues, this policy would attract new customers, increase use among existing customers, and enable us to charge interest rates that are higher than the lowest ones available.”
Discuss how well reasoned... etc.

The author concluded that the Easy Card Company will gain a competitive edge against its competitor and increase its profit by donating some part of its proceeding to environmental organisation in exchange for the use of its symbol.The author supports his conclusion by giving a reason:
that now a days people, who are enormously concerned about environmental issues, will increase their spending to donate and hence, policy will attract new customers and increase the use among existing customers. The author's reasoning is flawed for couple of reasons.

Firstly, In analysing the argument, the author oversimplified the situation. The author planned his strategy just on the basis of poll result. The author assumes that using a logo of well known environmental company over the credit card will help in attracting new users and encourage the use among the existing users. The author fails to account that most of people who are concerned about environmental issues may already hold debit card instead of credit card, and people may prefer to donate by themselves to environmental company rather than by credit card company. Therefore, author strategy may not work.
The author needs to follow some influential course of action.
For example, The Chase Manhattans bank, a credit line company, gives a "ChaseConsolidatorReward", from frequent flight chaser to shoe, clothing, or any grocery product customers, a offer that gives heavy rebate to patron such as
no annual card fees and 9 percent charges instead of 15 to 17 percent charges, which is current market rate, if people follow this credit line. Thereby, this policy has been attracting new customers and reinvigorating the use among existing customers.

Second, the author states that if the Easy Card Company donate some part of its proceeding to environmental organisation in exchange for the use of its symbol, it will get help in gaining a competitive edge. The author fails to consider that even if Easy Card Company uses the logo over the card, Bank companies will issue the card of other competitors. The author may achieve the target if Easy Card Company wins over the bank which issues the credit card to patron. For instance, Newyork bank, holding a chain of 124 banks in all over world and major credit card issuer bank, get some percentage of proceedings from Visa credit card. Consequently, most of patrons hold Visa credit card.

Finally, the author's recommendation of using logo over the card may not work even if most of people are concerned about environment issues. People may prefer to have direct contact with environmental organisation through its website.

In conclusion, the author's police is unpersuasive. In contrast of using logo and donating the proceeding to organisation, implementing the more productive strategy as mentioned above may help the Easy Card Company.
.
Manager
Manager
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S
Joined: 23 Nov 2017
Posts: 109
Location: Singapore
Concentration: Strategy, Other
GMAT 1: 660 Q49 V33
Re: Please help in AWA  [#permalink]

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New post 06 Aug 2018, 18:28
Mate, I am not sure if the stem mentioned customers donating a sum through Easy Credit Company. Could you please read closely and confirm? In my opinion, it just says that Easy Credit Company can donate some funds in exchange of their logo, which the company intends to use on its card. Given that a good percentage of population cares for environment, the company (owing to its attachment to env. company) will attract customers.
GMAT Club Bot
Re: Please help in AWA &nbs [#permalink] 06 Aug 2018, 18:28
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Please help in AWA

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