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# The fact that superior service can generate a competitive

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Senior Manager
Joined: 10 Mar 2008
Posts: 360
The fact that superior service can generate a competitive [#permalink]

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25 Jul 2008, 05:38
10
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Practice Passage
Passage No.: 10
Questions: 50 to 55
Page: 40, 41
Difficulty:

The fact that superior service can generate a competitive advantage for a company does not mean that every attempt at improving service will create such an advantage. Investments in service, like those in production and distribution, must be balanced against other types of investments on the basis of direct, tangible benefits such as cost reduction and increased revenues. If a company is already effectively on a par with its competitors because it provides service that avoids a damaging reputation and keeps customers from leaving at an unacceptable rate, then investment in higher service levels may be wasted, since service is a deciding factor for customers only in extreme situations.

This truth was not apparent to managers of one regional bank, which failed to improve its competitive position despite its investment in reducing the time a customer had to wait for a teller. The bank managers did not recognize the level of customer inertia in the consumer banking industry that arises from the inconvenience of switching banks. Nor did they analyze their service improvement to determine whether it would attract new customers by producing a new standard of service that would excite customers or by proving difficult for competitors to copy. The only merit of the improvement was that it could easily be described to customers.
Q1 :- The primary purpose of the passage is to

(A) contrast possible outcomes of a type of business investment
(B) suggest more careful evaluation of a type of business investment
(C) illustrate various ways in which a type of business investment could fail to enhance revenues
(D) trace the general problems of a company to a certain type of business investment
(E) criticize the way in which managers tend to analyze the costs and benefits of business investments

[Reveal] Spoiler:
B

Q2 :- According to the passage, investments in service are comparable to investments in production and distribution in terms of the

(A) tangibility of the benefits that they tend to confer
(B) increased revenues that they ultimately produce
(C) basis on which they need to be weighed
(D) insufficient analysis that managers devote to them
(E) degree of competitive advantage that they are likely to provide

[Reveal] Spoiler:
C

Q3 :- The passage suggests which of the following about service provided by the regional bank prior to its investment in enhancing that service?

(A) It enabled the bank to retain customers at an acceptable rate
(B) It threatened to weaken the bank’s competitive position with respect to other regional banks
(C) It had already been improved after having caused damage to the bank’s reputation in the past.
(D) It was slightly superior to that of the bank’s regional competitors.
(E) It needed to be improved to attain parity with the service provided by competing banks.

[Reveal] Spoiler:
A

Q4 :- The passage suggests that bank managers failed to consider whether or not the service improvement mentioned in lines 18-20

(A) was too complicated to be easily described to prospective customers
(B) made a measurable change in the experiences of customers in the bank’s offices
(C) could be sustained if the number of customers increased significantly
(D) was an innovation that competing banks could have imitated
(E) was adequate to bring the bank’s general level of service to a level that was comparable with that of its competitors

[Reveal] Spoiler:
D

Q5 :- The discussion of the regional bank (line 13-24) serves which of the following functions within the passage as a whole?

(A) It describes an exceptional case in which investment in service actually failed to produce a competitive advantage.
(B) It illustrates the pitfalls of choosing to invest in service at a time when investment is needed more urgently in another area.
(C) It demonstrates the kind of analysis that managers apply when they choose one kind of service investment over another
(D) It supports the argument that investments in certain aspects of service are more advantageous than investments in other aspects of service.
(E) It provides an example of the point about investment in service made in the first paragraph.

[Reveal] Spoiler:
E

Q6 :- The author uses the word “only” in line 23 most likely in order to
(A) highlight the oddity of the service improvement
(B) emphasize the relatively low value of the investment in service improvement
(C) distinguish the primary attribute of the service improvement from secondary attributes
(D) single out a certain merit of the service improvement from other merits
(E) point out the limited duration of the actual service improvement

[Reveal] Spoiler:
B

[Reveal] Spoiler: Question #1 OA
[Reveal] Spoiler: Question #2 OA
[Reveal] Spoiler: Question #3 OA
[Reveal] Spoiler: Question #4 OA
[Reveal] Spoiler: Question #5 OA
[Reveal] Spoiler: Question #6 OA

Last edited by Narenn on 02 Oct 2013, 11:40, edited 2 times in total.
Necessary Corrections for Official Guide Verbal Review 2nd Edition Project
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29 Dec 2008, 12:59
This OG suppl. passage is such a bastard - I got half of it wrong
Any attempts to explain it would be appreciated.
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09 Apr 2009, 20:32
Senior Manager
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10 Apr 2009, 07:57
BAACBA
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Joined: 03 Apr 2011
Posts: 9
Source: OG The fact that superior service can generate a [#permalink]

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04 May 2011, 23:56
Source: OG

The fact that superior service can generate a competitive
advantage for a company does not mean that every attempt
at improving service will create such an advantage. Investments
in service, like those in production and distribution,
must be balanced against other types of investments on the
basis of direct, tangible benefits such as cost reduction and
increased revenues. If a company is already effectively on a
par with its competitors because it provides service that
avoids a damaging reputation and keeps customers from
leaving at an unacceptable rate, then investment in higher
service levels may be wasted, since service is a deciding
factor for customers only in extreme situations.

This truth was not apparent to managers of one regional
bank, which failed to improve its competitive position
despite its investment in reducing the time a customer had
to wait for a teller. The bank managers did not recognize
the level of customer inertia in the consumer banking
industry that arises from the inconvenience of switching
banks. Nor did they analyze their service improvement to
determine whether it would attract new customers by producing
a new standard of service that would excite customers
or by proving difficult for competitors to copy. The
only merit of the improvement was that it could easily be
described to customers.

Can we discuss what does 'only merit' means here. I will post the questions afterwards. Lets just share our views.

thanks
Patanjali
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Joined: 20 Dec 2010
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Re: The fact that superior service can generate a competitive [#permalink]

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05 May 2011, 01:01
patanjali wrote:
Source: OG

The fact that superior service can generate a competitive
advantage for a company does not mean that every attempt
at improving service will create such an advantage. Investments
in service, like those in production and distribution,
must be balanced against other types of investments on the
basis of direct, tangible benefits such as cost reduction and
increased revenues. If a company is already effectively on a
par with its competitors because it provides service that
avoids a damaging reputation and keeps customers from
leaving at an unacceptable rate, then investment in higher
service levels may be wasted, since service is a deciding
factor for customers only in extreme situations.

This truth was not apparent to managers of one regional
bank, which failed to improve its competitive position
despite its investment in reducing the time a customer had
to wait for a teller. The bank managers did not recognize
the level of customer inertia in the consumer banking
industry that arises from the inconvenience of switching
banks. Nor did they analyze their service improvement to
determine whether it would attract new customers by producing
a new standard of service that would excite customers
or by proving difficult for competitors to copy. The
only merit of the improvement was that it could easily be
described to customers.

Can we discuss what does 'only merit' means here. I will post the questions afterwards. Lets just share our views.

thanks
Patanjali

"Only merit" is the "only advantage" or "sole plus point" that came out of the improvement in standard of service by reducing the amount of time a customer has to wait for the teller.

Merit: The customers could be explained easily that they wouldn't have to wait long anymore to see the teller.
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Re: The fact that superior service can generate a competitive [#permalink]

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07 May 2011, 14:14
fluke wrote:
patanjali wrote:
Source: OG

The fact that superior service can generate a competitive
advantage for a company does not mean that every attempt
at improving service will create such an advantage. Investments
in service, like those in production and distribution,
must be balanced against other types of investments on the
basis of direct, tangible benefits such as cost reduction and
increased revenues. If a company is already effectively on a
par with its competitors because it provides service that
avoids a damaging reputation and keeps customers from
leaving at an unacceptable rate, then investment in higher
service levels may be wasted, since service is a deciding
factor for customers only in extreme situations.

This truth was not apparent to managers of one regional
bank, which failed to improve its competitive position
despite its investment in reducing the time a customer had
to wait for a teller. The bank managers did not recognize
the level of customer inertia in the consumer banking
industry that arises from the inconvenience of switching
banks. Nor did they analyze their service improvement to
determine whether it would attract new customers by producing
a new standard of service that would excite customers
or by proving difficult for competitors to copy. The
only merit of the improvement was that it could easily be
described to customers.

Can we discuss what does 'only merit' means here. I will post the questions afterwards. Lets just share our views.

thanks
Patanjali

"Only merit" is the "only advantage" or "sole plus point" that came out of the improvement in standard of service by reducing the amount of time a customer has to wait for the teller.

Merit: The customers could be explained easily that they wouldn't have to wait long anymore to see the teller.

Lets try this:

The author uses the word “only” in line 23 most likely in order to
(A) highlight the oddity of the service improvement
(B) emphasize the relatively low value of the investment in service improvement
(C) distinguish the primary attribute of the service improvement from secondary attributes
(D) single out a certain merit of the service improvement from other merits
(E) point out the limited duration of the actual service improvement

[Reveal] Spoiler:
OA - B
- Pls explain how does the OA fit in our interpretation of 'only' that you suggested before reading the question/option.
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Re: The fact that superior service can generate a competitive [#permalink]

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07 May 2011, 15:16
patanjali wrote:
Lets try this:

The author uses the word “only” in line 23 most likely in order to
(A) highlight the oddity of the service improvement
(B) emphasize the relatively low value of the investment in service improvement
(C) distinguish the primary attribute of the service improvement from secondary attributes
(D) single out a certain merit of the service improvement from other merits
(E) point out the limited duration of the actual service improvement

[Reveal] Spoiler:
OA - B
- Pls explain how does the OA fit in our interpretation of 'only' that you suggested before reading the question/option.

I don't understand what you are trying to convey. OA is making perfect sense. My answer before was just to convey literal meaning of the word "only". I didn't answer the question from the perspective of author's tone while using the word "only". Furthermore, rest all of the options are not correct.
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Re: The fact that superior service can generate a competitive [#permalink]

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14 May 2011, 03:19
actually this can be interpreted in 2 ways.

1. the value of investment was low i.e. the resources allocated(input) for the investment were less.

2. the output generated by the investment was low, which is stated in B
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Re: The fact that superior service can generate a competitive [#permalink]

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04 Aug 2011, 08:45
I got B as the best answer. I first got confued with D, which is single out the certain merit, but then i read the entire line corretly and noticed that i not singling out the merits from other merits of customer improvement as there are no other merits mention in the passage.
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Re: The fact that superior service can generate a competitive [#permalink]

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12 Feb 2013, 21:28
The author uses the word “only” in line 23 most likely in order to
(A) highlight the oddity of the service improvement
(B) emphasize the relatively low value of the investment in service improvement
(C) distinguish the primary attribute of the service improvement from secondary attributes
(D) single out a certain merit of the service improvement from other merits
(E) point out the limited duration of the actual service improvement

First of, you will notice that when the author mentioned the ONLY MERIT comment, he/she was explaining why the approach failed and that the author should have considered factors such as: (1) Will it attract new customers? and (2) Will it be easily imitated by competitors? Then sarcastically goes to say its only merit. To me, it conveyed a meaning that the author finds little value to the approach sought by the failed bank approach.

A. It's not odd.
C. There are not primary/ secondary attributes discussed.
D. This is a trap. It did mention that but its for the purpose that when linked to the previous sentences show how little the approach has accomplished. B is better.
E. No such duration mentioned.

By tone and by structure, the author is pointing out how little helpful the approach was.
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Re: The fact that superior service can generate a competitive [#permalink]

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24 Jul 2013, 15:30
For Q 3, first of all tell what is the answer, and then explain where in passage specifically should I go to search out the answer?
For Q 4, please explain why not B?
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Re: The fact that superior service can generate a competitive [#permalink]

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25 Sep 2013, 15:34
Actually found the OA's guys

Here they are:

[Reveal] Spoiler:
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Re: The fact that superior service can generate a competitive [#permalink]

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03 Jun 2014, 08:37
Q3 :- The passage suggests which of the following about service provided by the regional bank prior to its investment in enhancing that service?

(A) It enabled the bank to retain customers at an acceptable rate
(B) It threatened to weaken the bank’s competitive position with respect to other regional banks
(C) It had already been improved after having caused damage to the bank’s reputation in the past.
(D) It was slightly superior to that of the bank’s regional competitors.
(E) It needed to be improved to attain parity with the service provided by competing banks.

Where is A mention in the passage?
It just says the service was easy to describe to the customers...

Q6 :- The author uses the word “only” in line 23 most likely in order to
(A) highlight the oddity of the service improvement
(B) emphasize the relatively low value of the investment in service improvement
(C) distinguish the primary attribute of the service improvement from secondary attributes
(D) single out a certain merit of the service improvement from other merits
(E) point out the limited duration of the actual service improvement

Again, where is it mentioned that the investment was low?
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Re: The fact that superior service can generate a competitive [#permalink]

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08 Jun 2014, 22:05
CCECEB. What is OA, guys?
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Re: The fact that superior service can generate a competitive [#permalink]

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10 Jun 2014, 04:22
I'll give a shot at attempting to explain the answers.

1) C is incorrect because the passage illustrates only ONE WAY in which the investment has failed to generate increased revenues. That leaves B is the correct answer

2) C is the correct answer. Second line of passage. Straightforward.

3) "The bank managers did not recognize the level of customer inertia in the consumer banking industry that arises from the inconvenience of switching banks."
From this statement we can infer that although existing service was inferior to the new service, but the disadvantage in the existing system was not a strong enough motivation for customers to make them consider switching to competitors. So A can be somewhat concluded and is the correct answer as every other option is 100% incorrect.

4) "Nor did they analyze their service improvement to determine whether it would attract new customers by producing a new standard of service that would excite customers or"
B can be concluded to be the correct answer from this statement.

"by proving difficult for competitors to copy"
D can be inferred to be the correct on the basis of this statement.

So In my opinion both B and D can be the correct answers.

5)E is the correct answer. Para 1 talks about reasons why sometimes investment in better services does not yield increased revenues and para 2 gives an example of such a situation.

6) in Para 2 author goes at length to describe various flaws in the decision to make a new investment and closes the passage with a merit of the new investment. Here "only" is used to highlight the difference between the "value of merit" to the "value of demerits"( ability to easily explain to customer is a relatively miniscule advantage when compared to disadvantage of inability of new service to attract new customers). So option B is correct

Option B uses a phrase " relatively low value of the investment", here the word "value" does not refer to the actual MONETARY VALUE of the investment but to the VALUE ADDITION that is brought out due to investment.
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Re: The fact that superior service can generate a competitive [#permalink]

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17 Apr 2015, 06:16
DABBEA
i am so pissed at this passage?
it broke my all correct streak .....
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Re: The fact that superior service can generate a competitive [#permalink]

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02 May 2015, 20:01
I got the second question wrong. The passage says: Investments in service, like those in production and distribution, must be balanced against other types of investments on the basis of direct, tangible benefits such as cost reduction and increased revenues.

The question is: According to the passage, investments in service are comparable to investments in production and distribution in terms of the?

So, why can't A be correct? It says: tangibility of the benefits that they tend to confer.

I am not saying C is incorrect; my question is more about why A is not.
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Re: The fact that superior service can generate a competitive [#permalink]

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03 May 2015, 01:24
saumya12 wrote:
I got the second question wrong. The passage says: Investments in service, like those in production and distribution, must be balanced against other types of investments on the basis of direct, tangible benefits such as cost reduction and increased revenues.

The question is: According to the passage, investments in service are comparable to investments in production and distribution in terms of the?

So, why can't A be correct? It says: tangibility of the benefits that they tend to confer.

I am not saying C is incorrect; my question is more about why A is not.

I think "tangible benefits" can be very different, for example customers start smiling because of new level of service - it's tangible benefit: we can see it, but this benefit shouldn't be taken into account when we make decision about investment. So "tangibility of benefits" can't be a factor in decision about investment. According to the passage only money should be a factor, money is tangible too, but its tangibility is not a focus.
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Re: The fact that superior service can generate a competitive [#permalink]

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04 May 2015, 07:13
Harley1980 wrote:
I think "tangible benefits" can be very different, for example customers start smiling because of new level of service - it's tangible benefit: we can see it, but this benefit shouldn't be taken into account when we make decision about investment. So "tangibility of benefits" can't be a factor in decision about investment. According to the passage only money should be a factor, money is tangible too, but its tangibility is not a focus.

Hello Harley1980, thanks for your response.

I just checked the meaning of "tangible". It says: perceptible by touch.

So, it seems to me that "smiling" would not qualify as tangible benefit.

Also, did you notice by the way, that the word "tangible" is actually used in the passage in this context:

Investments in service, like those in production and distribution, must be balanced against other types of investments on the basis of direct, tangible benefits such as cost reduction and increased revenues.
Re: The fact that superior service can generate a competitive   [#permalink] 04 May 2015, 07:13

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