The First Banking Group's decision to invest in an : GMAT Critical Reasoning (CR)
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The First Banking Group's decision to invest in an

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Senior Manager
Joined: 19 Feb 2004
Posts: 414
Location: Lungi
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The First Banking Group's decision to invest in an  [#permalink]

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08 Apr 2004, 03:00
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Question Stats:

88% (02:14) correct 13% (00:00) wrong based on 15 sessions

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The First Banking Group's decision to invest in an
electronic network for transferring funds was based
on a cost advantage over a nonelectronic system of
about ten dollars per transaction in using an elec-
tronic system. Executives reasoned further that the
system would give them an advantage over competi-
tors.

Which of the following, if it is a realistic possibility,
most seriously weakens the executives' projection of
(A) The cost advantage of using the electronic sys-
tem will not increase sufficiently to match the
pace of inflation.
(B) Competitors will for the same reasons install
electronic systems, and the resulting overca-
pacity will lead to mutually damaging price
wars.
(C) The electronic system will provide a means for
faster transfer of funds, if the First Banking
Group wishes to provide faster transfer to its
customers.
(D) Large banks from outside the area served by
the First Banking Group have recently estab-
lished branches in that area as competitors to
the First Banking Group.
(E) Equipment used in the electronic network for
transferring funds will be compatible with
equipment used in other such networks.
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Senior Manager
Joined: 19 Feb 2004
Posts: 414
Location: Lungi
Followers: 1

Kudos [?]: 30 [0], given: 0

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10 Apr 2004, 11:13
yep OA is B.
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Re: The First Banking Group's decision to invest in an [#permalink]

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10 May 2016, 10:38
khanshainur wrote:
I tottaly agree with option A, i think it is the correct one

Inflation will be out of scope , answer will definitely be (B)

PS : Please find detailed discussion here the-first-banking-group-s-decision-to-invest-in-an-138307.html
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Re: The First Banking Group's decision to invest in an [#permalink]

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11 May 2016, 04:18
batliwala wrote:
The First Banking Group's decision to invest in an
electronic network for transferring funds was based
on a cost advantage over a nonelectronic system of
about ten dollars per transaction in using an elec-
tronic system. Executives reasoned further that the
system would give them an advantage over competi-
tors.

Which of the following, if it is a realistic possibility,
most seriously weakens the executives' projection of
(A) The cost advantage of using the electronic sys-
tem will not increase sufficiently to match the
pace of inflation.
(B) Competitors will for the same reasons install
electronic systems, and the resulting overca-
pacity will lead to mutually damaging price
wars.
(C) The electronic system will provide a means for
faster transfer of funds, if the First Banking
Group wishes to provide faster transfer to its
customers.
(D) Large banks from outside the area served by
the First Banking Group have recently estab-
lished branches in that area as competitors to
the First Banking Group.
(E) Equipment used in the electronic network for
transferring funds will be compatible with
equipment used in other such networks.

The electronic network gives the bank a financial edge. But what if the competitors also installed the electronic netwrok.
In this case, the advantage will be diminished.

Option B says just the same.

Correct Option: B
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Re: The First Banking Group's decision to invest in an   [#permalink] 11 May 2016, 04:18
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