OG 13: RC: Superior service competitive advantage

[joealam1]

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.


Q2 :- 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

[spoiler]OA:C[/spoiler]

[spoiler]I tried my best to understand why A is wrong but couldn't get it...the OG explanation didn't make sense at all to me[/spoiler]

[crackverbal]

let us read the passage.

Para 1 - sentence one states that every attempt at improving service will not generate competitive advantage. the second sentence expands on this by stating that Investments in service must be weighed against other types of investments in terms of tangible benefits. the last sentence of the paragraph states a principle in line with the previous sentence.

Para 2 - this paragraph gives an example of the principle stated in the last sentence of paragraph 1.

Q2. this is talked about in the second sentence of the paragraph.

"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."

This sentence says that the investments (in service and in production and distribution) must be balanced similarly. Only C states this.

A - incorrect. the statement does not say that the benefits they confer are similar.
B - this is not the comparison that is made. We cannot infer whether increased revenues conferred by these investments are comparable.
C - correct answer.
D - not mentioned.
E - not mentioned in the sentence.

[VivianKerr]

Hey Joe,

So, in order to get RC questions correct, we need to understand what the question-type is, and what kind of expectation that sets up for the correct answer.

Here, the phrase "according to the passage" tells us this is a Detail question. Detail questions are essentially "research" questions. They ask what the passage literally says about a specific detail. We are NOT meant to draw any kind of Inference (that's for "Inference" questions ).

Our job in a Detail question is to them research everything the passage says about the specific detail and then write those details down in shorthand on our scratch pad. We then go through the answer choices, reading all 5, and quickly eliminating the three "worst" choices.

Finally, after narrowing down our selection to two, we choose the one that is the closest to the specific language in the passage, without misrepresenting the author's tone. (We're always on the lookout for "extreme" language in answer choices in RC, since most RC passages have relatively moderate tones.)

Let's apply our strategy to this question!

DETAIL question (choose the literal answer!)

Rephrase: How are Service invests and Prod/Dist invests similar?

Let's look at what the passage says about "investments in service" and "investments in production and distribution":

- Service can give advantage, but could be a waste
- Must be balanced re: costs/rev benefits like prod/dist

Prediction: Both investments need to be balanced w/other invests re: $$$

Let's look at the answer choices:

A) uses some keywords, maybe
B) nope...author isn't saying they both make equal $$
C) yup, strongly matches our prediction
D) managers not mentioned
E) nothing specifically about "degrees" of advantage, just that they both need to be balanced

Our best two answer choices are (A) and (C). Now that we have it down to two, we ask ourselves, since this is a DETAIL question, which choice best restates the exact wording from the passage, while answering the specific question posed?

The answer is (C). The author's point was that BOTH types of investments must be balanced against other investments to make sure the $$$ is all good. That is how they were similar.

The "GMAT trickery" of (A) is something we commonly see in tempting wrong-answer RC Detail questions: it re-uses exact words from the passage, but does not answer the specific question posed.

The passage said, "must be balanced...on the basis of direct, tangible benefits." This choice says the two investments are similar because of the "tangibility of the benefits that they tend to confer." Notice the repeated language. Nice try, GMAT!

The question asked how the two investments are SIMILAR. They are similar because they must be balanced on the BASIS on tangible benefits, not that the tangible benefits themselves are similar. Maybe they are entirely different?

Students tend to miss RC questions when they do not understand the question-type, do not clarify the specific question being asked by "dumbing it down" in their own words, and move through the answer choices too quickly, going from "5 to 1" rather than "5 to 2."

"5 to 1" = danger of falling in love with the 1st decent answer choice you read
"5 to 2" = a higher likelihood the correct answer will be in your Top Two, and then you can analyze from there

How to Get Similar Questions Right
-Know that "according to the passage" = Detail questions
-Know that tempting wrong answers in Detail questions may "steal" from the passage, then distort it
-Rephrase the Question in your own words
-Re-read the relevant parts of the passage and WRITE DOWN a prediction in your own words

Hope this gives you some thought for how you can strengthen your GMAT RC strategy moving forward! Feel free to email me if you have any questions!

Best,
Vivian