The last article in this series on the Verbal Reasoning section introduced a “three-track” attentiveness strategy for the GMAT Reading Comprehension Section:
what the passage says | what the author is doing | what the author/subjects think
This article will apply the “three-track” reading strategy to the only business/economics passage classified as “hard” in the official GMAT prep materials (out of sixteen business/economics passages). Since the strategy was outlined in its own article, we’ll dive right in.
Strategy for GMAT Reading Comprehension: Three-track
(1) 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,
(5) 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
(10) 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
(15) 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
(20) 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
(25) 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.
We should note right away that the first sentence appears to be the thesis of this short passage. Since the author is writing to advance his own view, all three tracks will be tightly woven. What the passage says (track 1) will reveal what the author thinks (track 3) in a fairly direct way. What the author is doing (track 2) can be expressed in terms of the flow of his logic and the structure of his argument. This second track will be the key to understanding the passage well.
Let’s describe the first paragraph in terms of track 2, one sentence at a time.
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.
The author is stating his thesis.
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.
The author is not yet explaining his thesis. He is implying that if a service investment does not create a competitive advantage or lead to direct, tangible benefits, then companies should opt for other types of investments that do lead to such benefits. Now the author’s purpose may move from simply informing/explaining to warning/advising.
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.
Now the author is defining the point of diminishing returns for service investments, essentially fleshing out the first sentence of the passage. We have his idea of when and why a service investment may be wasted (that is, not create a competitive advantage or lead to tangible benefits.
These descriptions of what the author is doing are rather general, but that’s the point. If all you can do is restate the content of the passage, you probably don’t understand it very well. Speaking generally about what the author is doing means that you understand the passage’s flow and purpose.
Let’s move to the second paragraph, again going sentence-by-sentence:
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 author is introducing an example case to support his thesis. We may make a brief “track 3” note that the views of the bank managers differed from those of the author.
The bank managers did not recognize the level of customer inertia in the consumer banking industry that arises from the inconvenience of switching banks.
The author is providing information about the case study, explaining why the service investment did not lead to a competitive advantage for the bank.
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 author is providing more detail about what he considers to be the failures of the subjects in the case study.
The only merit of the improvement was that it could easily be described to customers.
The author completes his scathing analysis of the case study.
The direction of the passage’s second paragraph should trigger our “track 3” alarm. The author of the passage makes a lot of statements about what the bank managers “did not recognize” or “did not analyze,” but would the bank managers themselves concur with this assessment? Perhaps they believed their business would benefit from the service improvements for reasons not considered by the author of the passage. We’ll find out in the questions.
GMAT Reading Comprehension Practice Question
Here’s the first one:
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
Remember that we should always begin main idea questions by scanning the first word or phrase of each answer choice. “Criticize” at the beginning of choice E is attractive, but the answer choice is too general.
The other attractive options are “suggest” from choice B and “illustrate” from choice C, since the passage includes a case study. However, the passage does not illustrate “various ways” in which service investments might fail.
The correct answer is B: the primary purpose of the passage is to suggest more careful evaluation of a type of business investment. Understanding what the author is doing in the second sentence of the passage, where he mentions “other types of investments” and “direct, tangible benefits,” is the key to getting this question right!
If you neglect to think about the author’s reason for mentioning those things, you will have a hard time recognizing the correct answer choice on this main idea question.
GMAT Reading Comprehension Practice Question
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
Here we are again in the second sentence. Since we’ve already focused on the sentence, correct answer choice C should leap off the page.
GMAT Reading Comprehension Practice Question
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.
Answer choice A should look familiar. The point about retaining customers at an acceptable rate comes from the author’s definition in the third sentence of the “point of diminishing returns” for service investments. A is the correct answer.
GMAT Reading Comprehension Practice Question
The passage suggests that bank managers failed to consider whether or not the service improvement mentioned in lines 18–20
(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
Sometimes the wording of a GMAT question breaks a Sentence Correction standard, which is always ironic and satisfying to notice. The phrase “consider whether or not” is incorrect. It should just be “consider whether.”
Also, this question presents itself as belonging to the inference category, but the correct answer choice is essentially a rewording of explicit information from the passage. The passage said something about the potential for the service investment to “prove difficult for competitors to copy.” This corresponds to correct answer choice D.
GMAT Reading Comprehension Practice Question
The discussion of the regional bank in the second 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.
This is a great example of a function/plan question, and we are ready for it because we thought about what the author was doing! Answer choice A is incorrect because, from the author’s point of view, this bank is not an exceptional case; it is the rule, not the exception. Choices B, C, and D all go wrong by mentioning other kinds of investments. Choice E, beginning with “It provides an example,” is correct. This is exactly what we expected.
GMAT Reading Comprehension Practice Question
The author uses the word “only” in line 27 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
This question refers to the end of the passage, where the author speaks about the “only merit” of the plan in the bank example. Notice how answer choice B supports the author’s main point about service investments. Unsurprisingly, this is the correct answer, though it would be worthwhile in preparation to pinpoint the problems with the other answer choices.
As is often the case, reading this passage well was all about giving attention to track 2. Describing what the author is doing forces you to give due attention to what the passage is saying (track 1.) We’ll get to see track 3 come into play more meaningfully as we study a natural science/research passage in the next article.
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Contributor: Elijah Mize (Apex GMAT Instructor)