Traditionally, the first firm to commercialize a new technology has

Question

Traditionally, the first firm to commercialize a new technology has benefited from the unique opportunity to shape product definitions, forcing followers to adapt to a standard or invest in an unproven alternative. Today, however, the largest payoffs may go to companies that lead in developing integrated approaches for successful mass production and distribution.

Producers of the Beta format for videocassette recorders (VCRs), for example, were first to develop the VCR commercially in 1975, but producers of the rival VHS (Video Home System) format proved to be more successful at forming strategic alliances with other producers and distributors to manufacture and market their VCR format. Seeking to maintain exclusive control over VCR distribution, Beta producers were reluctant to form such alliances and eventually lost ground to VHS in the competition for the global VCR market.

Despite Beta’s substantial technological head start and the fact that VHS was neither technically better nor cheaper than Beta, developers of VHS quickly turned a slight early lead in sales into a dominant position. Strategic alignments with producers of prerecorded tapes reinforced the VHS advantage. The perception among consumers that prerecorded tapes were more available in VHS format further expanded VHS’s share of the market. By the end of the 1980’s, Beta was no longer in production.   1 
 1. The passage is primarily concerned with which of the following?

(A) Evaluating two competing technologies
(B) Tracing the impact of a new technology by narrating a sequence of events
(C) Reinterpreting an event from contemporary business history
(D) Illustrating a business strategy by means of a case history
(E) Proposing an innovative approach to business planning

2 
 2. According to the passage, today’s successful firms, unlike successful firms in the past, may earn the greatest profits by

(A) investing in research to produce cheaper versions of existing technology
(B) being the first to market a competing technology
(C) adapting rapidly to a technological standard previously set by a competing firm
(D) establishing technological leadership in order to shape product definitions in advance of competing firms
(E) emphasizing the development of methods for the mass production and distribution of a new technology

3 
 3. According to the passage, consumers began to develop a preference for VCR’s in the VHS format because they believed which of the following?

(A) VCR’s in the VHS format were technically better than competing-format VCR’s.
(B) VCR’s in the VHS format were less expensive than competing-format VCR’s.
(C) VHS was the first standard format for VCR’s.
(D) VHS prerecorded videotapes were more available than Beta-format tapes.
(E) VCR’s in the Beta format would soon cease to be produced.

4 
 4. The author implies that one way that VHS producers won control over the VCR market was by

(A) carefully restricting access to VCR technology
(B) giving up a slight early lead in VCR sales in order to improve long-term prospects
(C) retaining a strict monopoly on the production of prerecorded videotapes
(D) sharing control of the marketing of VHS-format VCR’s
(E) sacrificing technological superiority over Beta-format VCR’s in order to remain competitive in price

5 
 5. The alignment of producers of VHS-format VCR’s with producers of prerecorded videotapes is most similar to which of the following?

(A) The alignment of an automobile manufacturer with another automobile manufacturer to adopt a standard design for automobile engines.
(B) The alignment of an automobile manufacturer with an automotive glass company whereby the manufacturer agrees to purchase automobile windshields only from that one glass company.
(C) The alignment of an automobile manufacturer with a petroleum company to ensure the widespread availability of the fuel required by a new type of engine developed by the manufacturer.
(D) The alignment of an automobile manufacturer with its dealers to adopt a plan to improve automobile design.
(E) The alignment of an automobile dealer with an automobile rental chain to adopt a strategy for an advertising campaign to promote a new type of automobile.

6 
 6. Which of the following best describes the relation of the first paragraph to the passage as a whole?

(A) It makes a general observation to be exemplified.
(B) It outlines a process to be analyzed.
(C) It poses a question to be answered.
(D) It advances an argument to be disputed.
(E) It introduces conflicting arguments to be reconciled

mikemcgarry · Accepted Answer

Dear Poorvasha , I'm happy to respond.

First of all, let me say that #4 in this set is a very subtle and difficult question, about as hard as anything the GMAT would ask on RC. Think about it this way. The VHS-format VCRs and the pre-recorded VHS tapes are mutually dependent: one can't view the tapes of the VHS format without that format VCR, and without tapes in the VHS format, there would be nothing to play in the VCRs of that format. The two manufacturers of two different products need each other, because either one's products would be useless without the other's. Which relationship is most like this? The alignment of producers of VHS format VCRs with producers of prerecorded videotapes is most similar to which of the following? A) The alignment of an automobile manufacturer with another automobile manufacturer to adopt a standard design for automobile engines This is about several companies who make the same thing cooperating. This is not analogous to two different companies making two different but mutually dependent things. This choice is incorrect. B) The alignment of an automobile manufacturer with an automotive glass company whereby the manufacturer agrees to purchase automobile windshields only from that one glass company This automobile manufacturer appears to have a choice: it could buy from any glass company, but choose to agree to buy from one. This is not analogous: the VHS VCR manufacturers don't have a choice about which format tapes will play in their VCRs: similarly, the recorders of VHS tapes don't have have a choice about which format VCRs will play them. This choice is incorrect. C) The alignment of an automobile manufacturer with a petroleum company to ensure the widespread availability of the fuel required by a new type of engine developed by the manufacturer A new type of engine appears to require a some specific type of fuel. Here we have two companies making two different but mutually dependent things: the new engine simply will not run with the fuel it requires, and this particular fuel, while it may have some market already, would not have the new expanded market without vehicles with this new engine. This is a promising choice. D) The alignment of an automobile manufacturer with its dealers to adopt a plan to improve automobile design This is about something being planned. In the current situation, the VHS format had already been designed, and the analogy was about items already in existence and on the market. This choice is incorrect. E) The alignment of an automobile dealer with an automobile rental chain to adopt a strategy for an advertising campaign to promote a new type of automobile This relationship might be mutually beneficial, but it's not necessary. The automobile dealer presumably can sell those cars already, even if the rental chain did not exist, but the partnership of the chain would help the dealer. Similarly, the rental chain presumably could rent other cars, but this partnership with this particular automobile dealer will benefit the rental chain in some way. This is not a case of mutual need. This choice is not correct. Choice (C) is the only possible answer. Does all this make sense? Mike

iamdp · Answer

All questions for this passage are here

1. The passage is primarily concerned with which of the following?
(A) Evaluating  two competing technologies 
(B)  Tracing the impact  of a new technology by narrating a sequence of events
(C) Reinterpreting  an event  from contemporary business history
 (D) Illustrating a business strategy by means of a case history 
(E) Proposing  an innovative approach  to business planning

2. According to the passage, today’s successful firms, unlike successful firms in the past, may earn the greatest profits by
(A) investing in research to produce cheaper versions of existing technology
(B) being the first to market a competing technology
(C) adapting rapidly to a technological standard previously set by a competing firm
(D) establishing technological leadership in order to shape product definitions in advance of competing firms
 (E) emphasizing the development of methods for the mass production and distribution of a new technology   > directly mentioned in the passage

3. According to the passage, consumers began to develop a preference for VCR’s in the VHS format because they believed which of the following?
(A) VCR’s in the VHS format were technically better than competing-format VCR’s.
(B) VCR’s in the VHS format were less expensive than competing-format VCR’s.
(C) VHS was the first standard format for VCR’s.
 (D) VHS prerecorded videotapes were more available than Beta-format tapes.   > directly stated  
(E) VCR’s in the Beta format would soon cease to be produced.

4. The author implies that one way that VHS producers won control over the VCR market was by
(A) carefully restricting access to VCR technology
(B) giving up a slight early lead in VCR sales in order to improve long-term prospects
(C) retaining a strict monopoly on the production of prerecorded videotapes
 (D) sharing control of the marketing of VHS-format VCR’s 
(E) sacrificing technological superiority over Beta-format VCR’s in order to remain competitive in price

Here the battle is b/w B & D 
B is wrong because the lead in sales just gave a head start but VHS won control over market by the pre- recorder tapes marketing ie marketing of VHS-format VCR’s
 
5. The alignment of producers of VHS-format VCR’s with producers of prerecorded videotapes is most similar to which of the following?
(A) The alignment of an automobile manufacturer with another automobile manufacturer to adopt a standard design for automobile engines.
(B) The alignment of an automobile manufacturer with an automotive glass company whereby the manufacturer agrees to purchase automobile windshields only from that one glass company.
 (C) The alignment of an automobile manufacturer with a petroleum company to ensure the widespread availability of the fuel required by a new type of engine developed by the manufacturer. 
(D) The alignment of an automobile manufacturer with its dealers to adopt a plan to improve automobile design.
(E) The alignment of an automobile dealer with an automobile rental chain to adopt a strategy for an advertising campaign to promote a new type of automobile.

6. Which of the following best describes the relation of the first paragraph to the passage as a whole?
 (A) It makes a general observation to be exemplified.  ----  exactly matches the premises of the 1st paragraph  
(B) It outlines a process to be analyzed. ----  not a process a trend  
(C) It poses a question to be answered. ----  no questions raised  
(D) It advances an argument to be disputed. ----  not disputed but expanded  
(E) It introduces conflicting arguments to be reconciled. ----  It's states a general trend observed before and now and not conflicting arguments

AjiteshArun · Answer

The passage is structured like this:

(1) earlier situation (generally), new situation (generally)
(2) & (3) support (in the form of a particular example) for the new situation

So, for the second question, we could take a look at the second part of the first paragraph.

Quote:

Today, however, the largest payoffs may go to companies that lead in developing integrated approaches for successful mass production and distribution.

(a) The passage indicates that approaches for mass production and distribution are important. Making cheaper versions does not necessarily fit the mass production/distribution bit that the passage focuses on. For example, take a look at

Quote:

Despite Beta’s substantial technological head start and the fact that VHS was neither technically better nor cheaper than Beta

(price might be a great differentiator in reality, but not "according to the passage")
(b) This is the old approach (the opposite of what we're looking for).
(c) Just meeting standards already set does not fit the mass production/distribution bit.
(d) This is the old approach (the opposite of what we're looking for).
(e) Correct.

For the fifth question, we need to find an option that presents a situation similar to the one given in the question (manufacturers of VHS VCRs and manufacturers of videotapes).
(a) This is between manufacturers of the initial product. We need another party to make something that goes into (in this case) an automobile.
(b) Not a good fit for the situation. A tape is something that is combined with the VCR regularly to get the package to work. Glass sounds like a much more long term component (when it comes to automobiles).
(c) Correct. Pretty good fit. A specific type of fuel for a new engine. Regularly added to cars, and is consumed by cars, just as VCRs tend to chew up tape

.
(d) This is the initial design itself and does not involve two products that fit each other.
(e) An advertising campaign again does not involve two products that fit each other.

. (d) This is the initial design itself and does not involve two products that fit each other. (e) An advertising campaign again does not involve two products that fit each other.

Poorvasha · Answer

Hi mikemcgarry , Can you please help with Q4. The alignment of producers of VHS format VCRs with producers of prerecorded videotapes is most similar to which of the following? Thanks

madvarsha14 · Answer

Hi csaluja,
My 2 cents for why optiopn B cannot be the answer for Q4.
Nowhere in the passage it is stated that VHS producers  GAVE UP  a slight early lead in VCR sales in order to improve long-term prospects. The passage states that VHS producers received advantage of consumers' perception that prerecorded tapes were more available in VHS format because of their strategic alignments with producers of prerecorded tapes. This situation turned their slight early lead in sales into a dominant position.

Hope this helps..!!

rocky620 · Answer

AjiteshArun

For Q-4  The author implies that one way that VHS producers won control over the VCR market was by -

How can we translate "  Strategic alignments  with producers of prerecorded tapes reinforced the VHS advantage " to  Marketing  and not  Strict Monopoly

A strategy can be anything?

Kindly help.

AjiteshArun · Answer

Hi  rocky620 ,

You may be looking at C ("retaining a strict monopoly on the production of prerecorded videotapes") and D ("sharing control of the marketing of VHS-format VCRs"). Here's what the passage says about the production of videotapes:

1.  ... producers of the rival  VHS... format proved to be more successful at forming strategic alliances with other producers and distributors to  manufacture  and  market  their VCR ...

2.  Seeking to maintain exclusive control over VCR distribution,  Beta producers were reluctant to form such alliances ...

From (1), we know the producers of VHS formed strategic alliances with others (manufacturing and marketing). From (2), we know that the producers of Beta were reluctant to do so. So when the question asks us what the VHS producers did, we can't mark option C, because they weren't the ones looking to retain a strict monopoly. That was Beta. VHS shared control of both the manufacturing and marketing of their VCRs.

danymasri98 · Answer

GMATNinja  How do we answer question 5? I've read mikemcgarry's explanation but was not convinced because nowhere in the passage is it mentioned how the different formats work together. Are we supposed to know this knowledge? Perhaps the writer of the passage assumed everyone knows how VCR and VHS work.
When it comes down to it, I am stuck between A and C

GMATNinja · Answer

Question 5 A bit of knowledge doesn't hurt in this particular case (shout-out to those of use old enough to remember VHS

). That may be why this question was phased out of the practice materials so long ago -- this passage seems unlikely to appear in the current version of the test. To answer question 5, you do need to understand the relationship between "videocassette recorders" and "prerecorded tapes." That would have been common knowledge in the 1990s, but certainly not today. There's a chance that you could figure it all out using context clues, but honestly I wouldn't worry too much about this particular question. The passages that you'll encounter on your official exam won't ever rely on outside info like this. I hope that helps!

skmaan · Answer

Can someone help in breaking down 1st para into Main point - Conclusion/Premise - Argument - Yes/No way I selected E

Which of the following best describes the relation of the first paragraph to the passage as a whole? (A) It makes a general observation to be exemplified. (B) It outlines a process to be analyzed. (C) It poses a question to be answered. (D) It advances an argument to be disputed. (E) It introduces conflicting arguments to be reconciled

GMATNinja · Answer

The first paragraph isn't a self-contained argument with its own conclusion and supporting points. Instead, it's just an observation about a possibile difference between the way things traditionally have been and the way things are today:

Traditionally, simply being first mattered a lot (that is, first to  commercialize  a new technology).
 
 Now, simply being first to commercialize the technology might not be so beneficial. Instead, what matters is being first to develop "integrated approaches for successful mass production and distribution."

Notice that there's no real argument in the first paragraph because there's no support for either sentence. Rather, it's just a statement about what was traditionally the case and another statement about what the author thinks the case is now. Are those two statements conflicting? Well, not really, because the author is applying those two cases to two different time periods.

Sure, one stresses the importance of being first to commercialize the new tech and the other stresses the importance of being first to develop integrated approaches for production and distribution. But that difference is never reconciled -- it remains an important difference throughout the passage, and the author never tries to bridge those two scenarios.

The first paragraph doesn't contain multiple arguments, and the passage doesn't attempt to reconcile anything. So (E) can be eliminated.

(A) is a much better choice because paragraphs 2 and 3 describe an example of a case in which simply being first to commercialize a new technology wasn't enough. Instead, the rewards went to the firm that first formed strategic alliances with other producers and distributors -- in other words, the firm that first developed integrated approaches for successful mass production and distribution.

So paragraph 1 describes an observation about how things may have changed, and the rest of the passage describes an example that fits with that observation. That makes (A) the best choice.

I hope that helps!

VerbalBot · Answer

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Traditionally, the first firm to commercialize a new technology has

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