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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. 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. 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.
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 bank managers did not recognize
the level of customer inertia in the consumer banking
industry that arises from the inconvenience of switching
banks. 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
only merit of the improvement was that it could easily be
described to customers.

1. 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


OA:C

My question:I was struggling between A and B.Couldn't think it could be C.Can someone explain the
thought the author is portraying in the comparison stated.

3 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.

OA:A

My Question:How can one infer from the 2nd paragraph that the company already was able to retain the customers.I chose Bwith the understanding that the bank wanted to improve it's competitive position but the solution was not applied in the correct area.