The fact that superior service can generate a competitive advantage fo

Hi GMATNinja

In question 4,

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.

I seriously dont understand what this statement is trying to convey. By proving is parallel to by producing and hence, what I am inferring here is that, bank failed to determine whether it would attract new customers --> by producing new standard of service. And bank also failed to determine whether it would attract new customers by proving difficult for competitors to copy. Bank isnt proving difficult. The new standards should be difficult. I couldnt even grasp what the sentence is trying to convey and ended up eliminating all 5 options. Scary. Is that bad parallelism here? Or am I supposed to infer such meanings in RC?

Further, If bank failed to considered whether new standards will bring more customers by having standards difficult to copy, what i infer here is that bank failed to consider whether it will have new customers or not. Not the failure of considering how difficult it is for others to copy. WE really dont care how difficult it is for other banks to copy those standards. And we have no reason to believe that even in the case of no difficult, whether banks will invest some amount to keep up. Its a leap of faith.

I am an avid reader and yet, I got stuck in here without any direction. PLease help.

Take another look at the full sentence:
Here, "it" refers to "service improvement," NOT to banks or bank managers (you can tell because "it" needs to refer back to something singular, and "service improvement" is the only singular noun available).

With that understanding, here is how the parallelism shakes out:

Bank managers failed to analyze whether their service improvement would attract new customers by:

• producing a new standard of service that would excite customers; OR by
• proving difficult for competitors to copy.

The second parallel piece does require a small inference to understand: the service improvement could attract new customers IF it proved difficult for competitors to copy, because it would give the bank an advantage over its competitors.

However, the question makes our life easy. We do not need to figure out WHY a certain piece of information is important. We simply need to determine which answer choice is something that bank managers failed to consider when implementing the service improvement.

(D) is the only answer choice that does this. Can you think of a different answer choice (such as "whether [the bank] will have new customers," as you suggested)? Sure. But that is not one of the options in front of us, so it cannot be the correct answer. The managers failed to consider whether the service improvement "was an innovation that competing banks could have imitated," so (D) is the correct answer to question #4.

I hope that helps!

Here are the OG explanations for the questions

79. 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
Main idea
Look at the passage as a whole to find the primary purpose. This passage uses an example, described in the
second paragraph, to illustrate the principle of business practice explained in the first paragraph. The author
begins by saying that efforts to improve service do not always result in a competitive advantage for a company.
Thus, an investment in service must be carefully evaluated to determine if it will reduce costs or increase
revenues (lines 4–8).
A Only one outcome, failure to gain a competitive advantage, is examined.
B Correct. Investments in service must be carefully evaluated for the returns they will bring.
C Only one way, an unnecessary investment in improved service, is discussed.
D The example of the bank is used only to illustrate a general business principle; the bank itself is not the
focus of the passage.
E The passage criticizes the absence of such an analysis, not the way it is conducted.
The correct answer is B.
80. 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
Supporting ideas
The phrase according to the passage indicates that the question covers material that is explicitly stated in the
passage. The answer to this question demands a careful reading of the second sentence (lines 4–8). Investments in
service are like investments in production and distribution because they must be balanced against other types of
investments on the basis of direct, tangible benefits. Thus, these investments should be weighed on the same
basis.
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 revenues generated from
investing in production and distribution.
C Correct. An evaluation of whether or not to make these investments must be made on the same basis.
D How managers analyze investments in production and distribution is not discussed.
E The competitive advantage of superior service is acknowledged, but not the degree of it; it is not
mentioned at all in the context of production and distribution.
The correct answer is C.
81. 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.
Inference
Because the question uses the word suggests, finding the answer depends on making an inference about service at
the bank. The paragraph that discusses the bank begins with the transitional expression, this truth, which refers to
the previous sentence (lines 8–15). The truth is that investing in improved service is a waste 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. Because of the way the author has linked this
generalization to the description of the bank after investment, it is reasonable to infer that the hypothetical
company's situation describes the bank prior to its investment in improved service.
A Correct. The bank's service would have been good enough to avoid a damaging reputation and to retain
customers at an acceptable rate.
B The passage does not suggest that the bank's service was either poor or deficient to that of its competitors.
C The passage implies that the bank's service avoided a damaging reputation.
D The bank would have been on a par with its competitors, not superior to them.
E The bank would have been on a par with its competitors, not inferior to them.
The correct answer is A.
82. 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
Inference
The question's use of the word suggests means that the answer depends on making an inference. To answer this
question, look at the entire second paragraph. Managers failed to think ahead. Would the service improvement
attract new customers because other banks would find it difficult to copy? Or would the service improvement be
easily imitated by competitors? The managers should have investigated this area before investing in improved
service.
A The passage states the improvement could easily be described to customers (lines 28–29).
B No evidence in the passage shows that the managers failed to think about their customers' experience in the
bank.
C The passage does not imply that managers failed to consider an increase in clients.
D Correct. The managers did not wonder if other banks would copy their service improvement.
E Lines 8–12 imply that the bank enjoyed a comparable level of service before investing in service
improvement.
The correct answer is D.
83. The discussion of the regional bank in the second paragraph 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.
Logical structure
This question requires thinking about what the second paragraph contributes to the whole passage. The first
paragraph makes a generalization about investing in improvements in service; in certain conditions, such
improvements do not result in the competitive advantage a company hopes for. The second paragraph offers the
bank as an example of this generalization.
A The first sentence of the passage explains that improving service does not necessarily bring a competitive
advantage, so the bank is not exceptional.
B The bank illustrates the pitfall of not evaluating a service improvement on the basis of tangible benefits;
other areas of the bank are not mentioned.
C The passage does not discuss how managers analyze and choose different service investments.
D Investments in different aspects of service are not evaluated in the passage.
E Correct. The bank is an example of the position stated in the first paragraph that investing in improved
service can be a waste if the investment is not evaluated carefully.
The correct answer is E.
84. The author uses the word "only" in line 27 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
Logical structure
The question asks you to consider the logic of the author's word choice. The previous two sentences discuss why
the service improvement was a wasted investment. In contrast, the final sentence turns to the sole advantage of the
service improvement, which is trivial by comparison. The author uses only to modify merit in order to emphasize
the minimal nature of this advantage.
A The passage does not indicate that the service improvement is somehow strange or peculiar.
B Correct. Only emphasizes the low value attached to the single benefit.
C No attributes of the service improvement are mentioned.
D Only signifies that there was one sole merit of the service improvement.
E The duration of the benefit is not discussed in the passage.
The correct answer is B.

How come no one talks about Q5 :(! Am I the only one who got it wrong?
"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."
=> Doesn't this imply that improving its competitive position is more urgent/ a better choice? (The wordings: Failed, despite). If the author wanted to communicate neutral/ non-urgent tone, he would have said "This regional bank chose to invest in service and not its competitive position." However, the wordings "failed" and "despite" imply that it would have been better for them to focus on its competitive position.

Would someone please explain? GMATNinja?

Thanks!

Hi

The "improvement in competitive position" is the ultimate objective of all the steps which are considered in this context. Investing in service improvements is also one of these steps aimed at improving the company's (in this case, the regional bank's) competitive position. This is identified very early on in the passage, when it states:

"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."

Therefore, when option (B) states "...when investment is needed more urgently in another area", it is pointing to investment needed in an area different from customer service, which too is aimed at improving the bank's competitive position, and not investment in "improving the bank's competitive position" as an area distinct from customer service. This option is incorrect because the passage never talks about any areas other than customer service, so we cannot be sure that investment in another area was urgently required.

Hope this helps.

Thank you so much! This is such a good and insightful answer!! So the competitive position is the umbrella that also covers customer services and other areas. I thought it was parallel to/ on the same level with customer service, but it turns out it's one level up.

I have an issue with Q1.

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

(B) where does the author suggest a more careful evaluation???
(E) The author is critical throughout, why is it not (E)???

Can you explain the reason for option A in Question 3? I thought E is more directly mentioned in the passage.

Hi

Let me try to address your query.

The answer to Q3 can be gleaned from the lines which just precede the paragraph that talks about the regional bank. If we observe, the passage tells us:

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.

Now, how do we know that this applies to the regional bank? Because of the way the paragraph about the regional bank begins.

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 above, beginning with "This truth...", tells us that the points mentioned earlier about when investments in improving service do not help in improving a company's competitive position are applicable to whatever situation is going to be described hence, which is about the regional bank. Hence, option (A), which directly presents one of the facets mentioned in the preceding lines, is the correct answer.

As for option (E), once again we refer to the preceding lines, which tell us that the regional bank was "already effectively on a par with its competitors". Therefore, option (E), which states that the regional bank was a laggard, contradicts the information given in the passage and is incorrect.

Hope this helps.

in C, . basis on which they need to be weighed
it doesn't say that they needs to be weighed with tangible benefits as clear is mentioned in option A. and B gives clear example of tangible benefit. B could be rejected as increased benefits is just one example of tangible benefit.
If service investments need to be weighed against which they need to be weighed then there could be no tangible benefits there.


please help to differentiate between A and C.
still not clear .

thanks

Hi

On this topic, the passage states the following:

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.

In other words, the similarity between service investments and production and distribution investments is that they "must be balanced" against other options "on the basis of direct, tangible benefits" ie; service investments, just like production and distribution investments, must be compared with other potential investments, measuring the direct tangible benefits that each would accrue, before deciding on going ahead.

Option (A) says: tangibility of the benefits that they tend to confer

This assumes that service, distribution and production investments all provide tangible benefits, whereas the passage only tells us that any tangible benefits must be evaluated. We do not know if all such investments will provide benefits or not. Hence, this cannot be common to these investments.

Option (C) says: basis on which they need to be weighed

This is clearly consistent with the passage, as evidenced by the phrase "must be balanced" ie, must be "weighed" against others. Therefore this is the correct answer.

Hope this helps.

The question DOES NOT ask on what basis the investments should be weighed. That comes from (C), but is not part of the prompt. The question asks how investments in service are comparable, or similar, to investments in production and distribution.

So, while the author does suggest that companies should weigh the tangibility of the benefits of each type of investment, he/she does not indicate that the tangibility of these benefits is comparable, or similar, for each type of investment.

Imagine you’re asked to choose the best business plan after weighing the profitability of each. Does this mean that the profitability of each plan is COMPARABLE? Nope, it’s totally possible that one is way more profitable than another. What IS comparable is basis on which you judge each business plan: profitability.

As we said in our previous post, it’s possible that investments in service provide INTANGIBLE benefits, but investments in production and distribution provide HIGHLY TANGIBLE benefits. If that is the case, then investments in these areas are NOT comparable. The author recommends that companies determine tangibility, but DOES NOT suggest that tangibility is comparable for different types of investment.

For that reason, we can eliminate (A).

Likewise, (B) should be eliminated not because it gives just one example of what the author suggests should be weighed, but because it erroneously assumes that the revenues generated from investments in service, production, and distribution are similar. We don’t know whether those revenues are comparable. That’s why the author recommends further investigation. Eliminate (B).

The only thing that the author definitively states is comparable for investments in service and investments in production and distribution is the basis on which they should be weighed. Yes, that basis is the tangibility of their benefits. But we still don’t know whether the “level of tangibility” itself is comparable for the different types of investment. Hence, (C) is correct.

I hope that helps!

Hi GMATNinja @SajjadAhmed mikemcgarry

Please explain Q3, Q4 and Q5 of this passage I could not find a proper answer for the same.

Thanks

Hi medhamahrishi31,

For Q3, Please refer: https://gmatclub.com/forum/the-fact-tha ... l#p1909515

For Q4, Please refer: https://gmatclub.com/forum/the-fact-tha ... l#p2069596

For All Questions, Please refer the OE's: https://gmatclub.com/forum/the-fact-tha ... l#p2372969 - (79-84)

Let me know if you still have doubts.

Thanks.

I have to say I was really confused by Question: The passage suggests that bank managers failed to consider whether or not the service improvement mentioned in lines 18–20.

I am okay at GMAT (Q49 V42), also my GRE V was 161. But yes my native language is not English. So please tell me why I was wrong.

First, I don't like the logic of '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 point here is: the managers only need to analyze whether the attraction to customers is: 1. excitement. or 2. proving that their practices are difficult to copy. It actually does not make sense at all. How does 'proving' attract customers?? Let's say: Okay I prove to you, by whatever means, that my body shape is hard to be copied, so what? I still need to go out to the beach to attract girls! Proving is an action and the action itself will definitely not attract customers. So this sentence itself does not make sense. (Please tell me why I am wrong... please).

Even if this above sentence makes sense, I still don't like the question, and I think this question is flawed af. I read all the reviews. So maybe I am wrong but please just tell me why I am wrong.

It is absolutely possible that the managers know whether the practice is hard to copy or not, but he still has not considered why the practice attracts customers - exciting customers or proving?

Please help.....

My simple passage summary
1) Superior service does not always mean competitive advantage or higher revenue. You have to balance investment in service vs other things
2) Example of a Bank that wasted investment on improving service when it was already good..

As the author refers to "merit", i.e. the advantage/benefit, it can only refer to the output, which is why B is an easy pick. The benefit can be seen only AFTER the investment (input) has been made.