The fact that superior service can generate a competitive advantage fo

Official Answers:

88. 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.
89. 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 Idea
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.
90. 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.
91. 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.
92. 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.
93. 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