Established companies concentrate on defending what they already have. Consequently, they tend not to be innovative themselves and tend to...
GMAT Critical Reasoning : (CR) Questions
Established companies concentrate on defending what they already have. Consequently, they tend not to be innovative themselves and tend to underestimate the effects of the innovations of others.
Which of the following best completes the passage below?
Passage Analysis:
| Text from Passage | Analysis |
| Established companies concentrate on defending what they already have. |
|
| Consequently, they tend not to be innovative themselves and tend to underestimate the effects of the innovations of others. |
|
Argument Flow:
The argument starts with a claim about how established companies behave (defensive focus), then shows what this behavior leads to (lack of innovation and underestimating others). The question asks us to complete the passage with an example of this defensive strategy.
Main Conclusion:
Established companies' defensive focus makes them both less innovative and more likely to underestimate other companies' innovations.
Logical Structure:
This is a cause-and-effect argument. The defensive strategy (cause) leads to two specific problems (effects): poor innovation and underestimating competitors. We need to find a real-world example that shows this defensive behavior in action.
Prethinking:
Question type:
Logically Completes - We need to find a concrete example that perfectly illustrates how established companies use defensive strategies, which leads to both lack of innovation and underestimating others' innovations.
Precision of Claims
The passage makes behavioral claims about established companies - they focus on defending existing assets (activity), tend not to innovate (frequency), and tend to underestimate competitors' innovations (quality of judgment).
Strategy
Since we need to complete the phrase 'The clearest example of this defensive strategy is the fact that...', we should look for scenarios that show established companies protecting what they have while simultaneously failing to innovate and underestimating external innovations. The example should demonstrate both consequences mentioned in the argument.
This describes market evolution where fountain pens found a new luxury niche after ballpoint pens dominated the traditional market. However, this doesn't show defensive strategy in action - we don't see an established company defending what they have or underestimating innovations. This is more about successful market repositioning than defensive behavior.
This talks about a company that had both a failed model and a successful model. This example is about learning from failure and achieving success, which actually contradicts the passage's claim that established companies aren't innovative. There's no defensive strategy being illustrated here.
This perfectly illustrates defensive strategy! The slide rule manufacturer faced the innovation of electronic calculators, but instead of adapting to this new technology, they defensively tried to improve their existing product (slide rules). This shows both problems mentioned in the passage: they weren't innovative themselves (just making better versions of old technology) and clearly underestimated the effect of others' innovations (calculators would completely replace slide rules). This is exactly what the passage describes.
This describes an accounting machine being used by different industries than originally intended. This is about product versatility and market expansion, not about defensive strategies or failure to innovate. There's no established company defending their position here.
This talks about an inventor whose product found an unexpected market with dentists. Like choice D, this is about accidental market discovery, not about established companies being defensive or underestimating competitors. The focus is on unintended usage rather than corporate defensive behavior.