VT 51 - RC

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 benefi ts of business
investments

2. According to the passage, investments in service are
comparable to investments in production and
distribution in terms of the
(A) tangibility of the benefi ts that they tend to confer
(B) increased revenues that they ultimately produce
(C) basis on which they need to be weighed
(D) insuffi cient analysis that managers devote to
them
(E) degree of competitive advantage that they are
likely to provide

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

4. The passage suggests that bank managers failed to
consider whether or not the service improvement
mentioned
(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 offi ces
(C) could be sustained if the number of customers
increased signifi cantly
(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

5. 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 fi rst
paragraph.

6. The author uses the word “only” in the 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


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In an attempt to improve the overall performance of
clerical workers, many companies have introduced
computerized performance monitoring and control
systems (CPMCS) that record and report a worker’s
computer-driven activities. However, at least one
study has shown that such monitoring may not be
having the desired effect. In the study, researchers
asked monitored clerical workers and their
supervisors how assessments of productivity
affected supervisors’ ratings of workers’
performance. In contrast to unmonitored workers
doing the same work, who without exception
identified the most important element in their jobs
as customer service, the monitored workers and
their supervisors all responded that productivity
was the critical factor in assigning ratings. This
finding suggested that there should have been a
strong correlation between a monitored worker’s
productivity and the overall rating the worker
received. However, measures of the relationship
between overall rating and individual elements of
performance clearly supported the conclusion that
supervisors gave considerable weight to criteria
such as attendance, accuracy, and indications of
customer satisfaction.
It is possible that productivity may be a
“hygiene factor”; that is, if it is too low, it will hurt
the overall rating. But the evidence suggests that
beyond the point at which productivity becomes
“good enough,” higher productivity per se is unlikely
to improve a rating.


7. According to the passage, before the fi nal results of
the study were known, which of the following seemed
likely?
(A) That workers with the highest productivity would
also be the most accurate
(B) That workers who initially achieved high
productivity ratings would continue to do so
consistently
(C) That the highest performance ratings would be
achieved by workers with the highest
productivity
(D) That the most productive workers would be
those whose supervisors claimed to value
productivity
(E) That supervisors who claimed to value
productivity would place equal value on
customer satisfaction

8. It can be inferred that the author of the passage
discusses “unmonitored workers”  primarily in
order to
(A) compare the ratings of these workers with the
ratings of monitored workers
(B) provide an example of a case in which
monitoring might be effective
(C) provide evidence of an inappropriate use of
CPMCS
(D) emphasize the effect that CPMCS may have on
workers’ perceptions of their jobs
(E) illustrate the effect that CPMCS may have on
workers’ ratings

9. Which of the following, if true, would most clearly have
supported the conclusion referred to in lines in the last 4-5 lines ?
(A) Ratings of productivity correlated highly with
ratings of both accuracy and attendance.
(B) Electronic monitoring greatly increased
productivity.
(C) Most supervisors based overall ratings of
performance on measures of productivity alone.
(D) Overall ratings of performance correlated more
highly with measures of productivity than the
researchers expected.
(E) Overall ratings of performance correlated more
highly with measures of accuracy than with
measures of productivity.

10. According to the passage, a “hygiene factor”
is an aspect of a worker’s performance that
(A) has no effect on the rating of a worker’s
performance
(B) is so basic to performance that it is assumed to
be adequate for all workers
(C) is given less importance than it deserves in
rating a worker’s performance
(D) is not likely to affect a worker’s rating unless it is
judged to be inadequate
(E) is important primarily because of the effect it
has on a worker’s rating

11 The primary purpose of the passage is to
(A) explain the need for the introduction of an
innovative strategy
(B) discuss a study of the use of a particular
method
(C) recommend a course of action
(D) resolve a difference of opinion
(E) suggest an alternative approach