The fact that superior service can generate a competitive advantage fo

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.


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.

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!