Like many other industries, the travel industry is under increasing pressure to expand globally in order to keep pace with...
GMAT Reading Comprehension : (RC) Questions
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Like many other industries, the travel industry is under increasing pressure to expand globally in order to keep pace with its corporate customers, who have globalized their operations in response to market pressure, competitor actions, and changing supplier relations. But it is difficult for service organizations to globalize. Global expansion through acquisition is usually expensive, and expansion through internal growth is time-consuming and sometimes impossible in markets that are not actively growing. Some service industry companies, in fact, regard these traditional routes to global expansion as inappropriate for service industries because of their special need to preserve local responsiveness through local presence and expertise. One travel agency has eschewed the traditional route altogether. A survivor of the changes that swept the travel industry as a result of the deregulation of the airlines in 1978—changes that included dramatic growth in the corporate demand for travel services, as well as extensive restructuring and consolidation within the travel industry—this agency adopted a unique structure for globalization. Rather than expand by attempting to develop its own offices abroad, which would require the development of local travel management expertise sufficient to capture foreign markets, the company solved its globalization dilemma effectively by forging alliances with the best foreign partners it could find. The resulting cooperative alliance of independent agencies now comprises 32 partners spanning 37 countries.
Ques. 1/3
The passage suggests that one of the effects of the deregulation of the airlines was
Solution
1. Passage Analysis:
Progressive Passage Analysis
| Text from Passage | Analysis |
|---|---|
| Like many other industries, the travel industry is under increasing pressure to expand globally in order to keep pace with its corporate customers, who have globalized their operations in response to market pressure, competitor actions, and changing supplier relations. | What it says: Travel companies need to go global because their business customers have already gone global. What it does: Sets up the main problem/challenge that the passage will address Source/Type: Author's factual observation about industry trends Connection to Previous Sentences: This is our starting point - no previous information to connect to Visualization: Travel Company A serves Corporate Customer B. Customer B now operates in 25 countries, but Travel Company A only operates in 3 countries. Customer B pressures Travel Company A to serve them globally. Reading Strategy Insight: This is a classic setup sentence - identifying a business challenge. Expect the rest of the passage to explain solutions to this globalization pressure. What We Know So Far: Travel industry faces pressure to globalize What We Don't Know Yet: Why this is difficult, what solutions exist, specific examples |
| But it is difficult for service organizations to globalize. | What it says: Going global is hard for service companies (like travel agencies). What it does: Introduces the core difficulty/obstacle Source/Type: Author's assertion about service industry challenges Connection to Previous Sentences: This directly contrasts with the pressure described in sentence 1. Sentence 1 said companies MUST globalize, but sentence 2 says it's DIFFICULT to globalize. This creates tension that needs resolution. Visualization: Pressure to Expand Globally → BUT → Difficulty Expanding Globally = Problem that needs solving Reading Strategy Insight: The word "But" signals contrast. We now have a classic business problem setup: external pressure + internal difficulty = need for creative solutions. What We Know So Far: Travel companies face pressure to globalize, but globalization is difficult for service companies What We Don't Know Yet: WHY it's difficult, what solutions exist |
| Global expansion through acquisition is usually expensive, and expansion through internal growth is time-consuming and sometimes impossible in markets that are not actively growing. | What it says: The two traditional ways to expand globally both have problems: buying other companies costs too much money, and growing your own offices takes too much time (and might not even work). What it does: Explains WHY globalization is difficult by listing specific problems with traditional methods Source/Type: Author's explanation of business constraints Connection to Previous Sentences: This directly explains sentence 2. Sentence 2 said globalization is "difficult" - now we know exactly why: the two main paths (acquisition and internal growth) both have major drawbacks. Visualization: Path 1: Buy Foreign Companies → Problem: Costs $50 million Path 2: Build Own Offices → Problem: Takes 5 years + might fail Reading Strategy Insight: Feel relieved here - this isn't new complexity! It's just explaining the "difficulty" from sentence 2 with concrete details. What We Know So Far: Travel companies need to globalize, it's difficult because traditional methods (acquisition/internal growth) are expensive, slow, or risky What We Don't Know Yet: Alternative solutions |
| Some service industry companies, in fact, regard these traditional routes to global expansion as inappropriate for service industries because of their special need to preserve local responsiveness through local presence and expertise. | What it says: Some service companies think the traditional expansion methods are wrong for their industry because service companies need to understand and respond to local markets. What it does: Adds another layer of explanation for why traditional expansion doesn't work for service companies specifically Source/Type: Author reporting the views of some service companies Connection to Previous Sentences: This reinforces and deepens sentence 3's explanation. We already knew traditional methods had practical problems (cost, time). Now we learn they may be fundamentally wrong for service industries due to the need for local expertise. Visualization: Traditional Method: One-size-fits-all global approach Service Industry Need: Local expertise for each market (understanding local business customs, regulations, preferences) Result: Mismatch between method and industry requirements Reading Strategy Insight: The phrase "in fact" signals this is additional support for the same point. We're still on the same topic (why traditional expansion is problematic) - not jumping to new concepts. What We Know So Far: Traditional globalization methods don't work for travel companies due to cost, time, risk, AND because service industries need local market expertise What We Don't Know Yet: What alternative approach might work |
| One travel agency has eschewed the traditional route altogether. | What it says: One travel company completely avoided the traditional expansion methods. What it does: Introduces a specific example company that found a different solution Source/Type: Author introducing a case study Connection to Previous Sentences: This is the logical next step after establishing the problem. Sentences 1-4 explained the challenge and why traditional solutions don't work. Now we're about to see an alternative approach through a real example. Visualization: Traditional Route: ❌ (avoided completely) Alternative Route: ? (about to be revealed) Reading Strategy Insight: This is a transition sentence moving from problem to solution. The word "eschewed" just means "avoided" - don't get distracted by fancy vocabulary. Focus on the fact that we're about to learn about a different approach. What We Know So Far: Traditional expansion doesn't work for travel companies, and we have an example company that tried a different approach What We Don't Know Yet: What this alternative approach actually is |
| A survivor of the changes that swept the travel industry as a result of the deregulation of the airlines in 1978—changes that included dramatic growth in the corporate demand for travel services, as well as extensive restructuring and consolidation within the travel industry—this agency adopted a unique structure for globalization. | What it says: This travel agency survived major industry changes in 1978 when airlines were deregulated, which led to more corporate travel demand and industry reshuffling. The agency developed a unique way to go global. What it does: Provides background context on the example company and previews that they found a "unique" solution Source/Type: Author providing historical context and setup Connection to Previous Sentences: This elaborates on "one travel agency" from sentence 5. We're getting background info on the same company. The key point is they have a "unique structure" - an alternative to the traditional methods we know don't work. Visualization: 1978 Airline Deregulation → • More companies need travel services • Travel industry gets shaken up • This Agency: Survives + Develops unique globalization approach Reading Strategy Insight: Don't get lost in the historical details! The 1978 information is just background. The key point is this agency has a "unique structure" for the globalization challenge we've been discussing. We're still building toward the solution. What We Know So Far: We have an example of a travel agency that survived industry changes and developed a unique way to globalize (different from traditional methods) What We Don't Know Yet: What this unique approach actually involves |
| Rather than expand by attempting to develop its own offices abroad, which would require the development of local travel management expertise sufficient to capture foreign markets, the company solved its globalization dilemma effectively by forging alliances with the best foreign partners it could find. | What it says: Instead of building their own offices in other countries (which would require developing local knowledge), the company partnered with existing local companies in those countries. What it does: Reveals the alternative solution to the globalization problem Source/Type: Author explaining the company's strategy Connection to Previous Sentences: This finally answers the question raised throughout the passage! We knew traditional expansion (acquisition, internal growth) had problems, we knew this company found a "unique" approach, and now we learn what it is: strategic partnerships instead of going it alone. Visualization: Traditional Approach: Company A builds its own office in Country B (requires developing local expertise from scratch) Alternative Approach: Company A partners with established Local Company B (Local Company B already has the expertise) Reading Strategy Insight: This is the payoff moment! The whole passage build-up leads to this solution. Notice how it directly addresses the problems mentioned earlier - instead of needing to develop local expertise (time-consuming), they partner with companies that already have it. What We Know So Far: The solution is partnerships/alliances with existing local companies rather than traditional expansion methods What We Don't Know Yet: Specific details about how big or successful this alliance is |
| The resulting cooperative alliance of independent agencies now comprises 32 partners spanning 37 countries. | What it says: This partnership approach created a network of 32 independent partner companies covering 37 countries. What it does: Provides concrete evidence of the solution's success and scale Source/Type: Author providing factual outcome data Connection to Previous Sentences: This is the concrete result of the "forging alliances" strategy from sentence 7. Instead of just describing the approach, we now see its actual implementation and scope. The numbers (32 partners, 37 countries) show this wasn't just a small experiment - it's a substantial global network. Visualization: One Travel Agency → Partners with 32 local companies → Coverage across 37 countries Compare to: Building own offices in 37 countries (extremely expensive and time-consuming) Reading Strategy Insight: This is pure reinforcement - no new concepts! The author is simply quantifying the success of the partnership strategy. Feel confident here - you understand the complete argument from problem to solution to results. What We Know So Far: Complete picture - globalization pressure exists, traditional methods don't work for service companies, one company successfully used partnerships to create a 32-partner network covering 37 countries What We Don't Know Yet: Nothing essential - the main argument is complete |
2. Passage Summary:
Author's Purpose:
To explain how one travel company successfully solved the challenge of global expansion by using an alternative approach when traditional methods proved inadequate for service industries.
Summary of Passage Structure:
The author builds their argument by presenting a business problem and then showing how one company found a creative solution:
- First, the author establishes that travel companies face pressure to expand globally to serve their corporate customers who have already gone global.
- Next, the author explains why this globalization is particularly difficult for service companies, pointing out that traditional expansion methods (buying other companies or building your own offices) are expensive, slow, and don't work well for businesses that need local expertise.
- Then, the author introduces a specific travel agency that avoided these traditional methods entirely and developed a unique approach to globalization.
- Finally, the author reveals that this company's solution was to form partnerships with existing local companies in foreign markets, resulting in a successful network of 32 partners across 37 countries.
Main Point:
When traditional business expansion methods don't work due to industry-specific challenges, companies can successfully achieve their goals through creative alternatives like strategic partnerships that leverage existing local expertise rather than trying to build everything from scratch.
Question Analysis:
The question asks us to identify one of the effects that resulted from airline deregulation in 1978. We need to find what the passage specifically states or suggests happened as a consequence of this deregulation.
Connecting to Our Passage Analysis:
From our passage analysis, we know that sentence 6 provides the key information about airline deregulation in 1978. The passage states that this deregulation caused "changes that included dramatic growth in the corporate demand for travel services, as well as extensive restructuring and consolidation within the travel industry."
The passage analysis shows this information was provided as background context for the example travel agency, but it gives us specific details about what happened after deregulation:
- Dramatic growth in corporate demand for travel services
- Extensive restructuring and consolidation within the travel industry
Prethinking:
Based on the passage structure and the specific effects mentioned, I should look for an answer choice that matches either the increased corporate travel demand or the restructuring/consolidation that occurred. The phrase "consolidation within the travel industry" suggests that companies merged or combined, which would be a direct effect of deregulation.
Answer Choices Explained
A
a decline in the services available to noncommercial travelers
Why It's Wrong:
• The passage mentions "dramatic growth in the corporate demand for travel services" - this indicates expansion, not decline in services
• The passage focuses entirely on corporate/business travel, not noncommercial travelers
• No evidence suggests services decreased for any traveler category
Common Student Mistakes:
• The passage mentions "dramatic growth in the corporate demand for travel services" - this indicates expansion, not decline in services
• The passage focuses entirely on corporate/business travel, not noncommercial travelers
• No evidence suggests services decreased for any traveler category
Common Student Mistakes:
- Did students assume deregulation always leads to service cuts?
→ Focus on what the passage actually states happened, not general assumptions about deregulation - Did students confuse corporate travelers with noncommercial travelers?
→ The passage specifically mentions growth in corporate demand, which is the opposite of decline
B
a decrease in the size of the corporate travel market
Why It's Wrong:
• The passage explicitly states there was "dramatic growth in the corporate demand for travel services"
• Growth means increase, not decrease in market size
• This directly contradicts what the passage tells us happened
Common Student Mistakes:
• The passage explicitly states there was "dramatic growth in the corporate demand for travel services"
• Growth means increase, not decrease in market size
• This directly contradicts what the passage tells us happened
Common Student Mistakes:
- Did students misread "growth" as "decline"?
→ Reread carefully - the passage says "dramatic growth in the corporate demand" - Did students think deregulation would shrink the market?
→ Trust the passage's specific description of what actually occurred
C
a sharp increase in the number of cooperative alliances among travel agencies
Why It's Wrong:
• The passage mentions only one cooperative alliance as a recent solution to globalization challenges
• This alliance was created by one company as a response to globalization pressure, not as a result of 1978 deregulation
• The passage doesn't suggest this was a widespread trend following deregulation
Common Student Mistakes:
• The passage mentions only one cooperative alliance as a recent solution to globalization challenges
• This alliance was created by one company as a response to globalization pressure, not as a result of 1978 deregulation
• The passage doesn't suggest this was a widespread trend following deregulation
Common Student Mistakes:
- Did students confuse the timeline and think the alliance was created in 1978?
→ The alliance was a modern solution to current globalization pressure, not a 1978 response to deregulation - Did students assume one example represents a general trend?
→ The passage presents this as a unique approach by one company, not a widespread industry response
D
increased competition in a number of different service industries
Why It's Wrong:
• The passage only discusses effects within the travel industry specifically
• No mention is made of effects on other service industries beyond travel
• The scope is limited to travel industry changes
Common Student Mistakes:
• The passage only discusses effects within the travel industry specifically
• No mention is made of effects on other service industries beyond travel
• The scope is limited to travel industry changes
Common Student Mistakes:
- Did students extrapolate beyond what the passage actually covers?
→ Stay within the passage's scope - it only discusses travel industry effects - Did students assume broader industry effects without textual support?
→ Look for specific evidence in the passage rather than making logical leaps
E
the merging of some companies within the travel industry
Why It's Right:
• The passage explicitly states that deregulation led to "extensive restructuring and consolidation within the travel industry"
• "Consolidation" directly means the combining or merging of companies
• This is presented as one of the specific changes that resulted from 1978 airline deregulation
Key Evidence: "A survivor of the changes that swept the travel industry as a result of the deregulation of the airlines in 1978—changes that included dramatic growth in the corporate demand for travel services, as well as extensive restructuring and consolidation within the travel industry"
• The passage explicitly states that deregulation led to "extensive restructuring and consolidation within the travel industry"
• "Consolidation" directly means the combining or merging of companies
• This is presented as one of the specific changes that resulted from 1978 airline deregulation
Key Evidence: "A survivor of the changes that swept the travel industry as a result of the deregulation of the airlines in 1978—changes that included dramatic growth in the corporate demand for travel services, as well as extensive restructuring and consolidation within the travel industry"
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