GMAT RC – Analysis by Rahul Sir, Bfactory Director

Traditionally, the first firm to commercialize a new technology has benefited from the unique opportunity to shape product definitions, forcing followers to adapt to a standard or invest in an unproven alternative. Today, however, the largest payoffs may go to companies that lead in developing integrated approaches for successful mass production and distribution.
Producers of the Beta format for videocassette recorders (VCR’s), for example, were first to develop the VCR commercially in 1975, but producers of the rival VHS (Video Home System) format proved to be more successful at forming strategic alliances with other producers and distributors to manufacture and market their VCR format. Seeking to maintain exclusive control over VCR distribution, Beta producers were reluctant to form such alliances and eventually lost ground to VHS in the competition for the global VCR market.
Despite Beta’s substantial technological head start and the fact that VHS was neither technically better nor cheaper than Beta, developers of VHS quickly turned a slight early lead in sales into a dominant position. Strategic alignments with producers of prerecorded tapes reinforced the VHS advantage. The perception among consumers that prerecorded tapes were more available in VHS format further expanded VHS’s share of the market. By the end of the 1980’s, Beta was no longer in production.

1.The passage is primarily concerned with which of the following?
(A) Evaluating two competing technologies
(B) Tracing the impact of a new technology by narrating a sequence of events
(C) Reinterpreting an event from contemporary business history
(D) Illustrating a business strategy by means of a case history
(E) Proposing an innovative approach to business planning

2.According to the passage, today’s successful firms, unlike successful firms in the past, may earn the greatest profits by
(A) investing in research to produce cheaper versions of existing technology
(B) being the first to market a competing technology
(C) adapting rapidly to a technological standard previously set by a competing firm
(D) establishing technological leadership in order to shape product definitions in advance of competing firms
(E) emphasizing the development of methods for the mass production and distribution of a
new technology

3.Which of the following best describes the relation of the first paragraph to the passage as a whole?
(A) It makes a general observation to be exemplified.
(B) It outlines a process to be analyzed.
(C) It poses a question to be answered.
(D) It advances an argument to be disputed.
(E) It introduces conflicting arguments to be reconciled.

SOLVING SECTION

Central idea exercise –
1. A shift of advantage to make maximum mileage in application and benefits of a new technology from the first firms which commercialized the technology to companies that enter later and march ahead by developing integrated approaches for mass production and distribution.
2. The case history of Beta to exemplify the business strategy that has emerged today.
3. Despite Beta’s substantial head start with better and cheaper technology, it not only lost its market share to VHS but also ceased production by 1980.

Question solving

1.The passage is primarily concerned with which of the following?
(A) Evaluating two competing technologies
(B) Tracing the impact of a new technology by narrating a sequence of events
(C) Reinterpreting an event from contemporary business history
(D) Illustrating a business strategy by means of a case history
(E) Proposing an innovative approach to business planning

The main concern of the author is to show how strategies have changed in today’s business world regarding the maximum benefits of the first entrants with a new technology in the past and how those entering later have successfully snatched away this advantage by adopting integrated approach. The author uses the case of Beta to illustrate it. This is precisely what option (D) states. Hence it is the correct answer.
The author is not evaluating two competing technologies, so option (A) is incorrect.
Option (B) is not what the author’s main concern is, hence it can be eliminated.
Option (C) and (E) are also not the chief purpose of the author in writing the passage. So, both can be eliminated.

2.According to the passage, today’s successful firms, unlike successful firms in the past, may earn the greatest profits by
(A) investing in research to produce cheaper versions of existing technology
(B) being the first to market a competing technology
(C) adapting rapidly to a technological standard previously set by a competing firm
(D) establishing technological leadership in order to shape product definitions in advance of competing firms
(E) emphasizing the development of methods for the mass production and distribution of a
new technology

Option (A) is not mentioned. So, incorrect.
Option (B) was mentioned as a fact of the past, not of today. So, incorrect.
Option (C) and (D) are not mentioned in the passage, hence both can be eliminated.
A reading of the last line of the first paragraph, “Today, however, the largest payoffs may go to companies that lead in developing integrated approaches for successful mass production and distribution.”, clearly points to option (E) as the correct answer.

3.Which of the following best describes the relation of the first paragraph to the passage as a whole?
(A) It makes a general observation to be exemplified.
(B) It outlines a process to be analyzed.
(C) It poses a question to be answered.
(D) It advances an argument to be disputed.
(E) It introduces conflicting arguments to be reconciled.

The first paragraph is structured to make a general observation of a new phenomenon that makes it strikingly different from the past. It states the shift of success from the first entrant with a new technology to players who enter late but enhance their prospects of establishing a huge lead by adopting a new approach of integrated mechanism to secure mass production and distribution. The remaining two paragraphs then serve as examples to highlight this observation. This is best reflected in option (A). Hence, it is the correct answer.
The author is not outlining a process, but a trend. Hence option (B) is wrong.
There is no question raised by the author, hence option (C) is incorrect.
The author does not dispute but expands an argument, so option (b) is incorrect.
There is no conflicting arguments mentioned by the author, he rather states a general trend observed before and now. Hence option (E) is incorrect.

Level of difficulty –
Reading – Easy
Questions – Medium