The fact that a superior product can generate a competitive advantage

Question

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.    1 
 1. The discussion of the toy company in the second paragraph serves which of the following functions within the passage as a whole?

A. It describes in detail an exceptional case in which investment in the quality of a product actually failed to produce a competitive advantage.
B. It illustrates the potential problems of deciding to invest in the quality of a product at a time when investment is required more urgently in another area of the company.
C. It demonstrates the kind of analysis that executives apply when they select one kind of investment over another.
D. It supports the argument that investments in some aspects of product quality are more advantageous than investments in other aspects of a company.
E. It provides an example of the point about investment in product quality made in the first paragraph.

2 
 2. According to the passage, 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 in the future.
E. was sufficient to raise the product quality to a level comparable with that of its competitors.

3 
 3. 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.

RC Butler 2021  -  Practice 2 RCs Daily.   
Passage # 23 Date: 18-Jan-2021
 This question is a part of RC Butler 2021 .  Click here for Details

The above question is a copy of  this  Official question!

Gknight5603 · Answer

1.E 
2. D 
3. B

Waiting for the OA

Posted from my mobile device

Jaya6 · Answer

Hello,

could you please explain the solution to the 3rd question?

Gknight5603 · Answer

From the lines in the passage:

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.

We can infer that the author is suggesting care while adopting any technique for competitive advantage.
 
And in para 2 the author has provided one example for justifying his or her suggestion.

so B is clearly fit for primary purpose

Anshuman0902 · Answer

OE for question number 3 please

Ks1859 · Answer

Hi!

Let me try explaining my take to Q.3. I hope this helps!

The author starts by discussing that one factor of business(product quality) might be important, but, there are other important factors such as marketing and distribution, must be weighed against other types of investments with regard to direct, tangible benefits and gives us different cases and scenarios for investing. And then strengthens this view by providing the example of the toy manufacturer.

3. This primary purpose of this passage is to

A. compare potential positive and negative outcomes of a type of business investment.-->The author does not specifically discusses the positive and negative outcomes.--OUT
B. suggest greater due diligence into a type of business investment.-->I could hold on to this one, because the author while presenting the cases and scenario suggests to be careful while investing in a particular type of business investment, which might or might not be profitable to the organization as much as some other investment might be.--HOLD
C. illustrate a variety of cases in which a type of business investment could fail to achieve greater revenue.-->This is definitely not the primary purpose as the author discusses the cases primarily to strengthen some other part of the passage--OUT
D. analyze the general problems of a company caused by a certain type of business investment.-->The author does not discuss certain type of business investment, rather he discusses various types of investments apart from this, the author primary purpose is not to analyse but to suggest something from the analysis--OUT
E. criticize the manner in which managers tend to consider costs and benefits of business investments--Straight OUT.

IMO B

Do let me know if the reasoning behind the above explanation is wrong! I'd be happy to hear

rrrkkk · Answer

It took me 07:18 to finish question 1.

Okay, I'm totally new here but I think we can agree to eliminate option A because it is not an "exceptional" case.

Then move on to option B, well...basically I know it's a bit detail-oriented not sure whether this is right or not. anyway, I'll keep it and check back later...

And option C, I don't think the author writes the whole paragraph just to demonstrate the analysis of weighing decision.

D. contradict the delivery

E. It is pretty general but can't find any flaw so I will go for this answer. period.

napolean92728 · Answer

Identify Key Information in the Passage 
Even before seeing the question, extract  core concepts :
 
  Main theme:  Improving product quality doesn’t always lead to competitive advantage. 
  Reasoning:  Such investments must be justified by clear returns (profits, cost savings, revenue). 
  Case Study:  Toy company improved product durability → no competitive gain,  cannibalization  of sales. 
  Cause of failure:  Misunderstanding of customer loyalty to brand, not quality; overestimated quality’s impact.

3. This primary purpose of this passage is to

A. compare potential positive and negative outcomes of a type of business investment. 
⛔️  Too balanced . The passage doesn’t  compare  good vs bad outcomes — it  focuses on a negative case  where investment failed.
 B. suggest greater due diligence into a type of business investment. 
✅  Correct . The author  argues companies must weigh benefits  before improving product quality — exactly what the toy company failed to do.
 C. illustrate a variety of cases in which a type of business investment could fail to achieve greater revenue. 
⛔️  Too broad . Only  one  case is given, not a "variety" — this option overstates the scope.
 D. analyze the general problems of a company caused by a certain type of business investment. 
⛔️ The focus isn't on the  company’s general problems , but rather  why a certain kind of decision can fail  — the company is an example, not the focus.
 E. criticize the manner in which managers tend to consider costs and benefits of business investments. 
⛔️  Too accusatory/generalized . The tone is  analytical, not critical of all managers  — only the toy company's executives are discussed.

The fact that a superior product can generate a competitive advantage

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The fact that a superior product can generate a competitive advantage

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