Reading Comprehension

Source: OG

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. 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

OA: B

2. 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

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

4. The passage suggests that bank managers failed to consider whether or not the service improvement mentioned in line

(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

OA: D

5. The discussion of the regional bank in the 2nd 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.

OA: E

6. The author uses the word "only" in line ## 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

OA: B

1. Primary purpose: The author clearly states that investment in improved service needs to be investigated before it is done, to ensure that it will result in the intended increase in market share, etc. This points directly to option B.

A. Possible outcomes are not contrasted and this is too broad.
B. This is exactly correct, the author clearly wishes to warn people not to investment in services without careful consideration.
C. Various ways in which it fails have not been discussed in detail and additionally this is not the purpose, but a means to accomplishing the author's true purpose of advocating careful evaluation.
D. The investment doesn't cause problems - it just may not result in benefits.
E. Too broad and extreme.

2. Refer to this line in the passage: " Investments in service, like those in production and distribution, must be balanced against other types of investments..."

A. Not mentioned in the passage.
B. No reference to this.
C. Exactly. They both need to be weighed against other investments.
D. This is tempting but not explicitly mentioned. It's primarily a warning, not a sign that measures are insufficient presently.
E. Not true, no mention of this.

3. Service of the bank prior to enhancement. Refer to this line: "This truth was not apparent to managers of one regional bank..." Which truth is this? For that you need to go back to the general statement made in the previous paragraph, for which this is a specific example. "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...."

A. Exactly, this is an example of a company that already had service quality that was sufficient to retain customers.
B. No mention.
C. No mention.
D. Too extreme - no mention.
E. No mention of a need for improvement.

4. What did they fail to consider?

A. It is mentioned that it was easy to describe.
B. A measurable change isn't enough - it would need to be big enough to attract other customers.
C. No mention.
D. Exactly. This is clearly mentioned in the passage..."by proving difficult for competitors to copy.."
E. Nope, it would need to have gone over and above as well as be noticed by customers enough to attract them.

5. What role does the regional bank example serve?

A. Not an exceptional case. This is the main point of the passage so it's not an exception.
B. Nothing is said about what was needed in other areas, just that this particular investment did not product the intended results.
C. The kind of analysis is not demonstrated, it is just mentioned that they did not analyze it sufficiently.
D. Certain aspects are not compared - service in general.
E. This is clear enough, it refers to the point mentioned in para 1.

Today, I tried to solve this Rc and I did all correctly.