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# the fact that a superior product can generate a competitive advantage

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Senior Manager
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the fact that a superior product can generate a competitive advantage  [#permalink]

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Updated on: 13 Jul 2016, 22:34
7
The fact that a superior product can generate a competitive advantage for a company does not mean that every attempt at improving a product's quality will create such an advantage. Investments in product quality, like those in marketing and distribution, must be weighed against other types of investments with regard to direct, tangible benefits, such as increased profitability (including one or both of decreased costs and increased revenues) resulting from an investment. If a company is already competitive with others in the market in providing a product that is satisfactory to customers and avoids a negative reputation, then investment in increasing the quality of the product may be wasted because product quality, so long as it exceeds a minimum threshold, is rarely a primary factor for most customers in their buying decisions.

This concept was not understood by executives of one leading toy company, which failed to improve its competitive position, despite tremendous investment in strengthening the durability of its wooden toys. The toy company's executives did not recognize the leading role in which the brand names of their company and that of their primary competitors play in the buying decisions of their customers. As such, customers who are satisfied with a certain brand tend to remain loyal to that brand, despite changes in the quality of products made by that brand or any of its competitors. Similarly, they failed to analyze and properly understand the negative effects of an improvement in product quality, whereby their future purchases by customers loyal to their brand were actually cannibalized by the improved durability and extended lifespan of the newly improved toys. The only positive outcome of the improved product quality was the ability to easily market the toys to customers.
According to the passage, investments in product quality are comparable to investments in marketing and distribution in terms of their

A ability to measure the direct results they produce
B increased revenues they eventually produce
C manner in which they should be analyzed
D insufficient basis upon which executives research them
E level of competitive advantage they provide to a company

The passage suggests which of the following about the quality of the product produced by the toy company prior to its investment in enhancing that product quality?

A. It enabled the toy company to satisfy customers at an acceptable rate.
B. It would likely weaken the toy company's competitive position with respect to other leading toy companies.
C. It had already been improved after it caused damage to the toy company's reputation in the past.
D. It was slightly better than that of the toy company's major competitors.
E. It needed to be improved to attain a similar level to that of the competing toy companies.

This primary purpose of this passage is to

A. compare potential positive and negative outcomes of a type of business investment.
B. suggest greater due diligence into a type of business investment.
C. illustrate a variety of cases in which a type of business investment could fail to achieve greater revenue.
D. analyze the general problems of a company caused by a certain type of business investment.
E. criticize the manner in which managers tend to consider costs and benefits of business investments.

The passage suggests that the toy company's executives failed to consider whether or not the product quality improvement

A. was overly complex to the point that it could not easily be described to potential customers in marketing materials.
B. would considerably improve the experience of the individuals who used the toy.
C. could be sustained if the number of toys manufactured was significantly increased.
D. could have an adverse effect on their sales.
E. was sufficient to raise the product quality to a level comparable with that of its competitors.

Originally posted by Ekland on 13 Feb 2016, 05:46.
Last edited by Vyshak on 13 Jul 2016, 22:34, edited 4 times in total.
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Senior Manager
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Re: the fact that a superior product can generate a competitive advantage  [#permalink]

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13 Feb 2016, 06:31
1) a
2) b
3) b
4) d
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Re: the fact that a superior product can generate a competitive advantage  [#permalink]

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10 Jul 2016, 21:14
Intern
Joined: 12 Nov 2013
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Re: the fact that a superior product can generate a competitive advantage  [#permalink]

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10 Jul 2016, 21:17
1.A
2.A
3.D
4.D

11 minutes and 20 seconds

Senior Manager
Joined: 05 Nov 2012
Posts: 441
Concentration: Technology, Other
Re: the fact that a superior product can generate a competitive advantage  [#permalink]

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15 Jul 2016, 04:39
3
Top Contributor
1
According to the passage, investments in product quality are comparable to investments in marketing and distribution in terms of their

A ability to measure the direct results they produce
B increased revenues they eventually produce
C manner in which they should be analyzed
Investments in product quality, like those in marketing and distribution, must be weighed against other types of investments with regard to
direct, tangible benefits, such as increased profitability ( including one or both of decreased costs and increased revenues) resulting from an investment

D insufficient basis upon which executives research them
E level of competitive advantage they provide to a company

The passage suggests which of the following about the quality of the product produced by the toy company prior to its investment in enhancing that product quality?
A. It enabled the toy company to satisfy customers at an acceptable rate.
>>If a company is already competitive with others in the market in providing a product that is satisfactory to customers and avoids a negative reputation
B. It would likely weaken the toy company's competitive position with respect to other leading toy companies.
C. It had already been improved after it caused damage to the toy company's reputation in the past.
D. It was slightly better than that of the toy company's major competitors.
E. It needed to be improved to attain a similar level to that of the competing toy companies.

This primary purpose of this passage is to
A. compare potential positive and negative outcomes of a type of business investment.
B. suggest greater due diligence into a type of business investment.
>>The fact that a superior product can generate a competitive advantage for a company does not mean that every attempt at improving a product's quality will create such an advantage. Investments in product quality, like those in marketing and distribution, must be weighed against other types of investments with regard to direct, tangible benefits, such as increased profitability (including one or both of decreased costs and increased revenues) resulting from an investment.
C. illustrate a variety of cases in which a type of business investment could fail to achieve greater revenue.
D. analyze the general problems of a company caused by a certain type of business investment.
E. criticize the manner in which managers tend to consider costs and benefits of business investments.

The passage suggests that the toy company's executives failed to consider whether or not the product quality improvement
A. was overly complex to the point that it could not easily be described to potential customers in marketing materials.
B. would considerably improve the experience of the individuals who used the toy.
C. could be sustained if the number of toys manufactured was significantly increased.
D. could have an adverse effect on their sales.
>>Similarly, they failed to analyze and properly understand the negative effects of an improvement in product quality,
E. was sufficient to raise the product quality to a level comparable with that of its competitors.
Manager
Joined: 30 Apr 2017
Posts: 61
Re: the fact that a superior product can generate a competitive advantage  [#permalink]

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17 Nov 2017, 22:45
the passage says that: The only positive outcome of the improved product quality was the ability to easily market the toys to customers.
so why answer d is correct?
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Posts: 521
Location: India
Concentration: Marketing, Organizational Behavior
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Re: the fact that a superior product can generate a competitive advantage  [#permalink]

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20 Nov 2017, 05:37
1
soodia wrote:
the passage says that: The only positive outcome of the improved product quality was the ability to easily market the toys to customers.
so why answer d is correct?

The question asks what did the toy company's executives failed to understand?

Passage excerpt:
This concept was not understood by executives of one leading toy company, which failed to improve its competitive position, despite tremendous investment in strengthening the durability of its wooden toys. The toy company's executives did not recognize the leading role in which the brand names of their company and that of their primary competitors play in the buying decisions of their customers.

The highlighted portion suggests that their inability to understand the impact of product quality improvement had an adverse effect on their sales.
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Re: the fact that a superior product can generate a competitive advantage  [#permalink]

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20 Nov 2017, 05:39

Thanks!
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Posts: 58
Re: the fact that a superior product can generate a competitive advantage  [#permalink]

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07 Jan 2018, 14:59
1
TaN1213 wrote:

Thanks!

According to the passage, investments in product quality are comparable to investments in marketing and distribution in terms of their

-> Investments in product quality, like those in marketing and distribution, must be weighed against other types of investments with regard to direct,
tangible benefits, such as increased profitability
(including one or both of decreased costs and increased revenues) resulting from an investment.

= investments in product quality = not direct, tabgible benefit such as increased profitability

A ability to measure the direct results they produce
-> The passage argues that 'must be weighed against other types of investments with regard to direct, tangible benefits, such as increased profitability'
B increased revenues they eventually produce
-> The passage argues that 'must be weighed against other types of investments with regard to direct, tangible benefits, such as increased profitability'
C manner in which they should be analyzed
-> keep. 'must be weighed'
D insufficient basis upon which executives research them
-> 'insufficient basis' is not recommended
E level of competitive advantage they provide to a company
-> The passage argues that 'must be weighed against other types of investments with regard to direct, tangible benefits, such as increased profitability'

Only left thing is C. So OA is C
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Joined: 22 Jan 2018
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Re: the fact that a superior product can generate a competitive advantage  [#permalink]

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30 Jan 2018, 05:07
Senior Manager
Joined: 27 Dec 2016
Posts: 292
Re: the fact that a superior product can generate a competitive advantage  [#permalink]

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02 Feb 2018, 18:38
Current Student
Joined: 06 Sep 2016
Posts: 132
Location: Italy
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Re: the fact that a superior product can generate a competitive advantage  [#permalink]

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05 Feb 2018, 10:40
4/4 in 05:37
Manager
Status: EAT SLEEP GMAT REPEAT!
Joined: 28 Sep 2016
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Re: the fact that a superior product can generate a competitive advantage  [#permalink]

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11 May 2018, 20:50
Hi VeritasPrepKarishma,

I was confused between options A and E, ended up choosing option E.But the OA is C.

Ekland wrote:
The fact that a superior product can generate a competitive advantage for a company does not mean that every attempt at improving a product's quality will create such an advantage. Investments in product quality, like those in marketing and distribution, must be weighed against other types of investments with regard to direct, tangible benefits, such as increased profitability (including one or both of decreased costs and increased revenues) resulting from an investment. If a company is already competitive with others in the market in providing a product that is satisfactory to customers and avoids a negative reputation, then investment in increasing the quality of the product may be wasted because product quality, so long as it exceeds a minimum threshold, is rarely a primary factor for most customers in their buying decisions.

This concept was not understood by executives of one leading toy company, which failed to improve its competitive position, despite tremendous investment in strengthening the durability of its wooden toys. The toy company's executives did not recognize the leading role in which the brand names of their company and that of their primary competitors play in the buying decisions of their customers. As such, customers who are satisfied with a certain brand tend to remain loyal to that brand, despite changes in the quality of products made by that brand or any of its competitors. Similarly, they failed to analyze and properly understand the negative effects of an improvement in product quality, whereby their future purchases by customers loyal to their brand were actually cannibalized by the improved durability and extended lifespan of the newly improved toys. The only positive outcome of the improved product quality was the ability to easily market the toys to customers.
According to the passage, investments in product quality are comparable to investments in marketing and distribution in terms of their

A ability to measure the direct results they produce
B increased revenues they eventually produce
C manner in which they should be analyzed
D insufficient basis upon which executives research them
E level of competitive advantage they provide to a company

The passage suggests which of the following about the quality of the product produced by the toy company prior to its investment in enhancing that product quality?

A. It enabled the toy company to satisfy customers at an acceptable rate.
B. It would likely weaken the toy company's competitive position with respect to other leading toy companies.
C. It had already been improved after it caused damage to the toy company's reputation in the past.
D. It was slightly better than that of the toy company's major competitors.
E. It needed to be improved to attain a similar level to that of the competing toy companies.

This primary purpose of this passage is to

A. compare potential positive and negative outcomes of a type of business investment.
B. suggest greater due diligence into a type of business investment.
C. illustrate a variety of cases in which a type of business investment could fail to achieve greater revenue.
D. analyze the general problems of a company caused by a certain type of business investment.
E. criticize the manner in which managers tend to consider costs and benefits of business investments.

The passage suggests that the toy company's executives failed to consider whether or not the product quality improvement

A. was overly complex to the point that it could not easily be described to potential customers in marketing materials.
B. would considerably improve the experience of the individuals who used the toy.
C. could be sustained if the number of toys manufactured was significantly increased.
D. could have an adverse effect on their sales.
E. was sufficient to raise the product quality to a level comparable with that of its competitors.

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the fact that a superior product can generate a competitive advantage  [#permalink]

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12 May 2018, 14:07
8 mins all correct. Pretty easy passage

Adi93 : May be this helps.

Question 1.

"improving a product's quality will create such an advantage. Investments in product quality, like those in marketing and distribution, must be weighed against other types of investments with regard to direct, tangible benefits, such as increased profitability (including one or both of decreased costs and increased revenues) resulting from an investment"

Hence C.
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Re: the fact that a superior product can generate a competitive advantage  [#permalink]

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14 May 2018, 09:37
2
Hi VeritasPrepKarishma,

I was confused between options A and E, ended up choosing option E.But the OA is C.

Ekland wrote:
The fact that a superior product can generate a competitive advantage for a company does not mean that every attempt at improving a product's quality will create such an advantage. Investments in product quality, like those in marketing and distribution, must be weighed against other types of investments with regard to direct, tangible benefits, such as increased profitability (including one or both of decreased costs and increased revenues) resulting from an investment. If a company is already competitive with others in the market in providing a product that is satisfactory to customers and avoids a negative reputation, then investment in increasing the quality of the product may be wasted because product quality, so long as it exceeds a minimum threshold, is rarely a primary factor for most customers in their buying decisions.

This concept was not understood by executives of one leading toy company, which failed to improve its competitive position, despite tremendous investment in strengthening the durability of its wooden toys. The toy company's executives did not recognize the leading role in which the brand names of their company and that of their primary competitors play in the buying decisions of their customers. As such, customers who are satisfied with a certain brand tend to remain loyal to that brand, despite changes in the quality of products made by that brand or any of its competitors. Similarly, they failed to analyze and properly understand the negative effects of an improvement in product quality, whereby their future purchases by customers loyal to their brand were actually cannibalized by the improved durability and extended lifespan of the newly improved toys. The only positive outcome of the improved product quality was the ability to easily market the toys to customers.
According to the passage, investments in product quality are comparable to investments in marketing and distribution in terms of their

A ability to measure the direct results they produce
B increased revenues they eventually produce
C manner in which they should be analyzed
D insufficient basis upon which executives research them
E level of competitive advantage they provide to a company

The passage suggests which of the following about the quality of the product produced by the toy company prior to its investment in enhancing that product quality?

A. It enabled the toy company to satisfy customers at an acceptable rate.
B. It would likely weaken the toy company's competitive position with respect to other leading toy companies.
C. It had already been improved after it caused damage to the toy company's reputation in the past.
D. It was slightly better than that of the toy company's major competitors.
E. It needed to be improved to attain a similar level to that of the competing toy companies.

This primary purpose of this passage is to

A. compare potential positive and negative outcomes of a type of business investment.
B. suggest greater due diligence into a type of business investment.
C. illustrate a variety of cases in which a type of business investment could fail to achieve greater revenue.
D. analyze the general problems of a company caused by a certain type of business investment.
E. criticize the manner in which managers tend to consider costs and benefits of business investments.

The passage suggests that the toy company's executives failed to consider whether or not the product quality improvement

A. was overly complex to the point that it could not easily be described to potential customers in marketing materials.
B. would considerably improve the experience of the individuals who used the toy.
C. could be sustained if the number of toys manufactured was significantly increased.
D. could have an adverse effect on their sales.
E. was sufficient to raise the product quality to a level comparable with that of its competitors.

IT is a specific detail question. I am guessing you found where it is mentioned:

"Investments in product quality, like those in marketing and distribution, must be weighed against other types of investments with regard to direct, tangible benefits, such as increased profitability (including one or both of decreased costs and increased revenues) resulting from an investment."

Structure - Investments in A, like those in B, must be weighed against other types ...

What is the similarity point? That both A and B must be weighed against other types of investments with regard to X, Y, Z etc

So the similarity is the manner in which they should be analyzed - they should be weighed against other types of investments.

Options (A) and (E) provide the specific points to consider while analysing them (X, Y, Z). They do not provide the similarity between A and B.

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Re: the fact that a superior product can generate a competitive advantage  [#permalink]

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06 Oct 2018, 02:35
P1 - Not every improvement is going to helpful.
P2 - an example for same thing.

According to the passage, investments in product quality are comparable to investments in marketing and distribution in terms of their

Investments in product quality, like those in marketing and distribution, must be weighed against other types of investments with regard to direct, tangible benefits, such as increased profitability (including one or both of decreased costs and increased revenues) resulting from an investment.

A ability to measure the direct results they produce - too broad choice. results means a lot many things.
B increased revenues they eventually produce - profit mentioned not revanue though.
C manner in which they should be analyzed - should be regarded would have been a better choice but still best of the lot. they should be analyze in one manner and that is improvement of quality.
D insufficient basis upon which executives research them - surely not this.
E level of competitive advantage they provide to a company - level of competitive advantage is not discussed.
-------------------------------------------

The passage suggests which of the following about the quality of the product produced by the toy company prior to its investment in enhancing that product quality?

toy company for sure want to improve it.

A. It enabled the toy company to satisfy customers at an acceptable rate. - best of the lot.
B. It would likely weaken the toy company's competitive position with respect to other leading toy companies. - no
C. It had already been improved after it caused damage to the toy company's reputation in the past. - no
D. It was slightly better than that of the toy company's major competitors. - we donr know about this.
E. It needed to be improved to attain a similar level to that of the competing toy companies. - no

---------------------------------------------

This primary purpose of this passage is to

A. compare potential positive and negative outcomes of a type of business investment. --- no for sure no.
B. suggest greater due diligence into a type of business investment. - yes para focus on careful analyse before making any improvement on product quality.
C. illustrate a variety of cases in which a type of business investment could fail to achieve greater revenue. -- no focus on revenue.
D. analyze the general problems of a company caused by a certain type of business investment. --- not always a problem.
E. criticize the manner in which managers tend to consider costs and benefits of business investments. ---- no way. blamed on managers.

B must be the best of the lot.

--------------------------------------------
The passage suggests that the toy company's executives failed to consider whether or not the product quality improvement

Similarly, they failed to analyze and properly understand the negative effects of an improvement in product quality, whereby their future purchases by customers loyal to their brand were actually cannibalized by the improved durability and extended lifespan of the newly improved toys. The only positive outcome of the improved product quality was the ability to easily market the toys to customers.

D. could have an adverse effect on their sales.
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Re: the fact that a superior product can generate a competitive advantage  [#permalink]

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13 Oct 2018, 02:38
Re: the fact that a superior product can generate a competitive advantage   [#permalink] 13 Oct 2018, 02:38
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