Passage 36
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. Invest-
ments in service, like those in production and distribution,
(5) must be balanced against other types of investments on the
basis of direct, tangible¹ 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
(10) 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
(15) despite its investment in reducing the time a customer had
to wait for a teller². The bank managers did not recognize
the level of customer inertia³ in the consumer banking
industry that arises from the inconvenience of switching
banks. Nor did they analyze⁴ their service improvement to
(20) determine whether it would attract new customers by pro-
ducing a new standard of service that would excite cus-
tomers or by proving difficult for competitors to copy. The
only merit of the improvement was that it could easily be
described to customers.
 
225. The primary purpose of the passage is to
(A)   contrast possible outcomes of a type of business investment
(B)   suggest more careful evaluation⁵ of a type of business investment
(C)   illustrate⁶ 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 (B)
(E)   criticize the way in which managers tend to analyze the costs and benefits of business investments
 
226. According to the passage, investments in service are comparable to investments in production
and distribution in terms of the
(A)   tangibility⁷ 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)  insufficient⁸ analysis that managers devote to them (C)
(E)   degree of competitive advantage that they are likely to provide
 
227. 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. (A)
(E)   It needed to be improved to attain⁹ parity¹⁰ with the service provided by competing banks.
 
228. The passage suggests that bank managers failed to consider whether or not the service
improvement mentioned in line 19
(A)   was too complicated to be easily described to prospective¹¹ 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 (D)
(E)   was adequate to bring the bank’s general level of service to a level that was comparable with that of its competitors
 
229. The discussion of the regional bank (line 13-24) 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 illustrates¹² the pitfalls¹³ 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 advantageous¹⁴ than investments in other aspects of service. (E)
(E)   It provides an example of the point about investment in service made in the first paragraph.
 
230. The author uses the word “only” in line 23 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 (B)
(E)   point out the limited duration of the actual service improvement

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