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The fact that superior service can generate a competitive advantage fo

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New post 25 Aug 2016, 00:13
manishkhare wrote:
Hello Rudranket,

Look at the below lines from the passage :
The only merit of the improvement was that it could easily be described to customers.


Now look at the question:
The passage suggests which of the following about service provided by the regional bank prior to its investment in enhancing that service?

The passage clearly says there was no improvement to the existing service level or it helped in adding new customers better then earlier. So we can derive that the existing service was good enough to attract the customers.

(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

Option A re-iterates the same position. Hence it is the correct answer.
Let me know if you have any further doubts.


Hi Manish,
I understand why the option A looks good as compared to B. But, why the option 'D' can't be answer to this ? can you pls explain. Thanks!
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New post 23 Sep 2016, 14:12
anchal - Why do you think (D) is correct. Can you give your reasoning?
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New post 25 Sep 2016, 22:17
Let's start with summarising the passage in a few points:
1. Investment in service must be evaluated like those in production and distribution
2. If a company provides service that avoids damaging reputation and keeps customers leaving at an unacceptable rate then investment in service wasted
3. Service is a deciding factor for customers only in extreme situations
4. Eg of a regional bank investing in wait time for a teller
5. Points not analysed - customer inertia to switch banks, will it attract new customers, is it easily imitable
6. Only merit - can be easily communicated to customers.

Coming to the questions:
Q1. Primary purpose
The passage clearly talks about aspects to evaluate when investing in service. This is clearly brought out in option B.

Q2. This question is clearly answered in the first point of our summary. Investments in service, production and distribution should be evaluated on similar parameters. Thus, the answer is C - "basis on which they need to be weighed"

Q3. In the passage the author does not point out any apparent business problem for the bank. In point no. 2 of our summary it talks about the two areas when investment in service might be a waste - which is what is also proved for the bank later. Thus, it had to be either service preventing a damaging reputation or which prevents customers from leaving at an alarming rate. In that case the best answer is Option A

Q4. In this question, check by elimination:
A. This was the only merit of the improvement: it could be communicated easily, so incorrect
B. There is no mention of measuring the customer experience in the passage, so incorrect
C. Scaling up and sustainability of the service improvement is not mentioned, so incorrect.
D. This is mentioned as a point by the author while critiquing the service improvement as a point not considered by the bank's managers. (part of point 5 in the summary), so CORRECT.
E. The service level of the bank is no where mentioned as being less than that of its competitors
So, the answer is D.

Q5. In this question also all points need to be considered:
A. By the tone and the first paragraph the author is clear that investments in service need to be well evaluated. So, incorrect.
B. The example does not mention that this investment was done at the cost of another area requiring urgent investment. So, incorrect.
C. Again, in the example only the particular area of service improvement is mentioned and no other alternate within service is mentioned. So, incorrect.
D. The author does not dive deep into aspects of service which should be invested in and which should not be invested in. So, incorrect.
E. The author is actually pointing out that the bank was doing fairly well when it comes to competition. In that respect investment in service was unnecessary. So, this is the correct option

Q6. In the example, the author has completely critiqued the investment put in by the bank. However, as a saving grace he mentions a sole possible benefit. The word "only" thus helps to showcase the limited value of the particular investment. So, the correct option is B.

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New post 06 Aug 2017, 18:58
Could somebody explain Q3 Please.

Where in the heaven is it mentioned that "It enabled the bank to retain customers at an acceptable rate" ?? :/
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New post 17 Aug 2017, 08:02
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T700ISB wrote:
Could somebody explain Q3 Please.

Where in the heaven is it mentioned that "It enabled the bank to retain customers at an acceptable rate" ?? :/

Quote:
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.

Refer to the first sentence of the second paragraph: "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."

This statement tells us that the bank already had a competitive position prior to its investment in enhancing service.

Now refer back to the following statement in the first paragraph: "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."

This implies that if a bank is competitive (i.e. "on a par with its competitors"), it provides service that keeps customers from leaving at an unacceptable rate. Since the bank was competitive prior to its investment in enhancing service, we can infer that, prior to that investment, the bank had already been providing service that kept customers from leaving at an acceptable rate. Thus, (A) is the best choice.

I hope that helps!
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New post 27 Sep 2017, 03:22
Tricky passage. Easy language. But in haste, there is a lot of score to waste.

Q.2 C is correct because when we say Investments in service, like investment in production & distribution, must be balanced against other types of investments on the basis of.
Now, if we need to compare investment in service and investment in other types, we could have chosen A. However, B is a part of A, and the choice would have become diffcult. However, the question asks us about comparison between service and production / distribution. Thus, because both the investments in services & production have to be balanced against other types on some basis, it is the basis which is common. Once again, tangibility can be a ground for comparison between investment in service and other types of investment.

Q.4 Option B is incorrect because it mentions "experiences of the customers", is different from attracting new customers on the basis of excitement. While the passage only talks about new customers, the options suggests to talk about existing customers too. Excited does not necessarily mean change in experience. Change in experience can be negative too. Option D is straightforward.
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New post 30 Jan 2018, 00:02
Hello GMATNinja ,
I would really appreciate your help in the following questions, in light of the retained options.
Thank You.

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
" 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."


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


B. made a measurable change in the experiences of customers in the bank’s
offices

D. was an innovation that competing banks could have imitated
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New post 30 Jan 2018, 08:57
Can someone please explain the primary purpose question to me . Since option C which states that how some investment could fail to be a competitive advantage and hence not result in revenue is what is the purpose of the passage is and the same is discussed in Paragraph 2 of the passage by stating an example of the regional banks . So why is option C incorrect ??
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New post 05 Feb 2018, 22:33
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TaN1213 wrote:
Hello GMATNinja ,
I would really appreciate your help in the following questions, in light of the retained options.
Thank You.

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
" 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 passage says that investments in service, 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." In other words, when compare your investment options, you have to look at the tangible benefits of each option.

However, that does NOT imply that the benefits of service investments are just as tangible as investments in production and distribution. For example, investments in service might confer a greater degree of INTANGIBLE benefits than investments in production and distribution. That's nice, but, according to the author, when deciding between different investment types, you have to look at the tangible benefits.

In other words, each option needs to be weighed on the BASIS of tangible benefits, but the tangibility of the benefits of each option might vary. Hence, (C) is a better choice than (A).

Similarly, revenue is an example of a tangible benefit that SHOULD be compared when weighing your options. However, that does not imply that each option will produce comparable increases in revenue. Eliminate (B).

(C) is the best answer.


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


B. made a measurable change in the experiences of customers in the bank’s
offices

D. was an innovation that competing banks could have imitated

The regional bank made an investment in service in order to reduce the time a customer had to wait for a teller. This would certainly result in a measurable change in the customers' experiences, so (B) can be eliminated.

For example, the bank could measure average wait times to see whether those times are reduced after the investment. That might be a nice change for existing customers, but will it attract new ones? According to the passage, the bank did NOT determine whether it would attract new customers either 1) by producing a new standard of service that would excite customers or 2) by proving difficult for competitors to copy.

In other words, the bank managers failed to consider whether the service improvement was an innovation that competing banks could have imitated.

Choice (D) matches the underlined portion and is the best answer.

longhaul123 wrote:
Can someone please explain the primary purpose question to me . Since option C which states that how some investment could fail to be a competitive advantage and hence not result in revenue is what is the purpose of the passage is and the same is discussed in Paragraph 2 of the passage by stating an example of the regional banks . So why is option C incorrect ??

Quote:
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

Yes, the passage does describe one way that service investments can fail to enhance revenues (by failing to attract new customers). But does the passage illustrate VARIOUS ways in which service investments can fail to enhance revenues?

Also, does the author want you to walk away from this passage thinking, "Ah yes, now I understand several different ways in which service investments can fail to enhance revenues."? That might be PART of the author's argument, but the author wants to warn the reader that service investments don't always work.

The author doesn't think that companies should think, "Hey, let's make a service investment to generate a competitive advantage!" Instead, the author thinks that companies should carefully evaluate service investments before making them, just as they would carefully evaluate production and distribution investments.

The author hopes that, after reading this passage, the reader will think twice (i.e. perform a careful analysis) before making a service investment. Thus, (B) is the best answer.

I hope that helps!
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Re: The fact that superior service can generate a competitive advantage fo  [#permalink]

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New post 24 May 2018, 12:40
Q4 . The passage suggests that bank managers failed to consider whether or not the service improvement mentioned in lines 18-20

I have concern regarding Option B . It is mentioned in the passage that
" 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 " . Doesn't Option B convey the same meaning of exciting customers.

Made a measurable change == Exciting Customers .
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New post 30 May 2018, 15:55
Talayva wrote:
Q4 . The passage suggests that bank managers failed to consider whether or not the service improvement mentioned in lines 18-20

I have concern regarding Option B . It is mentioned in the passage that
" 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 " . Doesn't Option B convey the same meaning of exciting customers.

Made a measurable change == Exciting Customers .

Making a measurable change does not necessarily mean "exciting customers."

According to the passage, the bank managers did not analyze their service improvement to determine whether it would attract new customers by producing a new standard of service that would excite customers. So, yes, you could say that the managers failed to analyze whether the change would excite people enough to cause them to switch banks. And excitement of customers might be a measurable change. So the managers may have failed to consider ONE possibly measurably change.

But did they fail to consider whether the service improvement would make a measurable change in the experiences of customers (choice B)? The regional bank managers DID consider whether the service improvement would reduce wait times, and that is certainly a measurable change. Even if they failed to consider excitement, they definitely considered wait times. So the managers definitely considered whether the improvement would make a measurable change. (B) has to be eliminated, as described in an earlier post:

GMATNinja wrote:
The regional bank made an investment in service in order to reduce the time a customer had to wait for a teller. This would certainly result in a measurable change in the customers' experiences, so (B) can be eliminated.

For example, the bank could measure average wait times to see whether those times are reduced after the investment. That might be a nice change for existing customers, but will it attract new ones? According to the passage, the bank did NOT determine whether it would attract new customers either 1) by producing a new standard of service that would excite customers or 2) by proving difficult for competitors to copy.

In other words, the bank managers failed to consider whether the service improvement was an innovation that competing banks could have imitated.

Choice (D) matches the underlined portion and is the best answer.

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New post 23 Jun 2018, 12:38
can someone please explain me question 3?
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New post 23 Jun 2018, 12:58
Bob2018 wrote:
can someone please explain me question 3?

Please refer to this post: https://gmatclub.com/forum/the-fact-tha ... l#p1909515
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New post 10 Jan 2019, 15:49
hongg7 wrote:
Can anyone please help with the 4th Question here? I chose B, which is wrong and I can't seem to infer answer D..

hongg7, please check out this earlier post. Let us know if that doesn't clear things up.
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New post 29 Apr 2019, 04:37
JarvisR wrote:
Can someone please help with Q6. I thought it was A.

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
>>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
A & B answers just part of it.

cost reduction and increased revenues.
(D) insufficient analysis that managers devote to them
(E) degree of competitive advantage that they are likely to provide

Q4 :- The passage suggests that bank managers failed to consider whether or not the service improvement mentioned in lines 18-20
The bank managers did not recognize
1: the level of customer inertia in the consumer banking industry that arises from the inconvenience of switching banks.
2: it would attract new customers by producing a new standard of service that would excite customers
3: by proving difficult for competitors to copy.

(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
>> Got tricked by this. But look at marked words. It mentions abt new customer.
(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


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

OG explanation
A the author is not equating the tangible benefits the different kinds of investments reap but rather the basis on which decisions to make investments are made.
B Revenues generated from investing in service are not said to be comparable to revenue generated from investing in production and distribution.
C correct An evaluation of whether or not to make these investment must be made on the same basis.
However, i couldn't find any connotation
regarding comparison


i am not able to comprehend these convoluted explanation. Experts please help BKimball mikemcgarry carcass GMATNinjaTwo chetan2u daagh GMATNinja
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New post 29 Apr 2019, 13:50
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Quote:
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.



C is the only possible answer

A. (A) tangibility of the benefits that they tend to confer

The passage suggests that you need to counterbalance the main effect with other investments and the benefits the latter brings in. It is indirect benefits NOT direct.

(B) increased revenues that they ultimately produce

I didnt see revenue here

(D) insufficient analysis that managers devote to them

I didnt see managers here. Neither to take a cup of coffee

No level of competitiveness is mentioned.

I hope now is more clear. Please leave kudos
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New post 11 Jul 2019, 11:07
Can anyone help with this?

The answer for Q6 does not seem correct

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

At no point in the passage is mentiond,the value of INVESTMENT in the service. What the passage actually tries to convey was that the RETURN ON INVESTMENT was not upto the mark.

Posted from my mobile device[/quote]
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New post 11 Jul 2019, 11:34
Wulfang wrote:
Can anyone help with this?

The answer for Q6 does not seem correct

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

At no point in the passage is mentiond,the value of INVESTMENT in the service. What the passage actually tries to convey was that the RETURN ON INVESTMENT was not upto the mark.

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[/quote]
Let me try if I can clear your doubt.
The passage states the return on investment is zero in attracting new customers. The way or tone here in this case is a bit sarcastic.
If there is at least some improvement on return of investment, then your words come into the picture.
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New post 13 Jul 2019, 07:37
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krishnabalu wrote:
Wulfang wrote:
Can anyone help with this?

The answer for Q6 does not seem correct

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

At no point in the passage is mentiond,the value of INVESTMENT in the service. What the passage actually tries to convey was that the RETURN ON INVESTMENT was not upto the mark.

Posted from my mobile device

Let me try if I can clear your doubt.
The passage states the return on investment is zero in attracting new customers. The way or tone here in this case is a bit sarcastic.
If there is at least some improvement on return of investment, then your words come into the picture.

Nice work, krishnabalu!

In choice (B), "value of the investment" does not refer to the literal amount of money invested. Instead, it refers to the worth or merit of that investment.

For example, if you consistently score 51 on the quant section of the GMAT and spend several hours each day studying quant only, you might say that your study time has little value. In this example, "value" doesn't refer to the investment itself (or, in this case, the time spent). Instead, it refers to the output -- what you are getting out of that time investment.

Similarly, if the only merit of a service improvement was that it could easily be described to customers, then we could say that the investment in the improvement had little value.

I hope that helps!
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New post 25 Jul 2019, 03:39
Hi All,

I am confused with the OA of question no.2 and question no. 6.

In question no.2 it says we need to find on what terms the investment in Services is comparable to investment in production and distribution. If we analyze OA it says basis on which they need to be weighed. So what I understood is that it is again saying on the basis of what they need to be compared, as weighed is comparison. It should give the paramters on what basis these two things should get compared rather than saying there should be some basis for comparison. So in short we are rephrasing the question itself. And in the passage it is given that these should be compared on the basis of direct tangible benefits. So it makes sense to got for A rather than C.

In question no. 6 the OA says - emphasize the relatively low value of the investment in service improvement. As passage no where quantify the amount of the investment that is done by banks. So the wording relatively low value of the investment makes little sense, it would be good if it would have stated as low value of return from investment,that makes more sense. Moreover no options in this question suffice for answer other than this, but it it also flawed. So what we are guessing we should mark best of the worst ??

Please if anyone can throw some light.
GMATNinja AjiteshArun can you give some insight.
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Re: The fact that superior service can generate a competitive advantage fo   [#permalink] 25 Jul 2019, 03:39

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