Seeking a Competitive Advantage, Some Professional Service Firms GMAT Reading Comprehension

Reading Passage Question

Seeking a competitive advantage, some professional service firms (for example, firms providing advertising, accounting, or health care services) have considered offering unconditional guarantees of satisfaction. Such guarantees specify what clients can expect and what the firm will do if it fails to fulfill these expectations. Particularly with first-time clients, an unconditional guarantee can be an effective marketing tool if the client is very cautious, the firm's fees are high, the negative consequences of bad service are grave, or business is difficult to obtain through referrals and word-of-mouth.

However, an unconditional guarantee can sometimes hinder marketing efforts. With its implication that failure is possible, the guarantee may, paradoxically, cause clients to doubt the service firm's ability to deliver the promised level of service. It may conflict with a firm's desire to appear sophisticated, or may even suggest that a firm is begging for business. In legal and health care services, it may mislead clients by suggesting that lawsuits or medical procedures will have guaranteed outcomes. Indeed, professional service firms with outstanding reputations and performance to match have little to gain from offering unconditional guarantees. And any firm that implements an unconditional guarantee without undertaking a commensurate commitment to quality of service is merely employing a potentially costly marketing gimmick.

‘Seeking a competitive advantage, some professional service firms’ is a GMAT reading comprehension passage with answers. Candidates need a strong knowledge of English GMAT reading comprehension. This GMAT Reading Comprehension consists of 6 comprehension questions.
The GMAT Reading Comprehension questions are designed for the purpose of testing candidates’ abilities in understanding, analyzing, and applying information or concepts. Approaching the GMAT RC passage should include active planning and certain strategies which could be undertaken by the candidates for attempting this section. Candidates can actively prepare with the help of GMAT Reading Comprehension Practice Questions.

Solution and Explanation

1. The primary function of the passage as a whole is to

(A) account for the popularity of a practice
(B) evaluate the utility of a practice
(C) demonstrate how to institute a practice
(D) weigh the ethics of using a strategy
(E) explain the reasons for pursuing a strategy

2. All of the following are mentioned in the passage as circumstances in which professional service firms can benefit from offering an unconditional guarantee EXCEPT:

(A) The firm is having difficulty retaining its clients of long standing.
(B) The firm is having difficulty getting business through client recommendations.
(C) The firm charges substantial fees for its services.
(D) The adverse effects of poor performance by the firm are significant for the client.
(E) The client is reluctant to incur risk.

3. Which of the following is cited in the passage as a goal of some professional service firms in offering unconditional guarantees of satisfaction?

(A) A limit on the firm’s liability
(B) Successful competition against other firms
(C) Ability to justify fee increases
(D) Attainment of an outstanding reputation in a fi eld
(E) Improvement in the quality of the firm’s service

4. The passage’s description of the issue raised by unconditional guarantees for health care or legal services most clearly implies that which of the following is true?

(A) The legal and medical professions have standards of practice that would be violated by attempts to fulfill such unconditional guarantees.
(B) The result of a lawsuit or medical procedure cannot necessarily be determined in advance by the professionals handling a client’s case.
(C) The dignity of the legal and medical professions is undermined by any attempts at marketing of professional services, including unconditional guarantees.
(D) Clients whose lawsuits or medical procedures have unsatisfactory outcomes cannot be adequately compensated by financial settlements alone.
(E) Predicting the monetary cost of legal or health care services is more difficult than predicting the monetary cost of other types of professional services.

5. Which of the following hypothetical situations best exemplifies the potential problem noted in the second sentence of the second paragraph (lines 15–19)?

(A) A physician’s unconditional guarantee of satisfaction encourages patients to sue for malpractice if they are unhappy with the treatment they receive.
(B) A lawyer’s unconditional guarantee of satisfaction makes clients suspect that the lawyer needs to find new clients quickly to increase the firm’s income.
(C) A business consultant’s unconditional guarantee of satisfaction is undermined when the consultant fails to provide all of the services that are promised.
(D) An architect’s unconditional guarantee of satisfaction makes clients wonder how often the architect’s buildings fail to please clients.
(E) An accountant’s unconditional guarantee of satisfaction leads clients to believe that tax returns prepared by the accountant are certain to be accurate

6. The passage most clearly implies which of the following about the professional service firms mentioned in lines 24–27?

(A) They are unlikely to have offered unconditional guarantees of satisfaction in the past.
(B) They are usually profitable enough to be able to compensate clients according to the terms of an unconditional guarantee.
(C) They usually practice in fields in which the outcomes are predictable.
(D) Their fees are usually more affordable than those charged by other professional service firms.
(E) Their clients are usually already satisfied with the quality of service that is delivered.

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