Which of the following, if true, weakens the senior manager's argument?
A) Producing a stripped-down model would alter high-end domestic customers' view of the Personal Devices brand.
B) A premium auto manufacturer who came out with economy cars suffered in the market.
C) India recently blocked low-priced Chinese phones that did not have the International Mobile Equipment Identification number.
D) Research suggests that the premium market segment is saturated.
E) Even high-end customers typically do not use the advanced functionality in Personal Devices cell phones.
Answer: A
Explanation: A) Making new products for a new market sounds like a good idea, but if the new phones would injure the company's image in its core market (Choice A), then making low-end phones sounds like a bad idea. Choice B is about cars, not phones, and we don't know why the company suffered. Choice C, if anything, suggests an opportunity for companies that can come up with low-priced base models. Choice D strengthens the argument by suggesting that Personal Devices should look outside the high-end market. Choice E, if anything, strengthens the claim that low-end is the way to go.
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On April 1, 2018, GMR Company purchased 30% of the outstanding voting stock of the Victory Corporation for $960,000. Victory's net assets on April 1, 2018 totaled $2,500,000. Victory's equipment was undervalued by $500,000 and its inventory was undervalued by $200,000 as of the date of purchase. The equipment has a ten-year remaining life as of April 1, 2018; the inventory was sold during 2018. Victory reported $450,000 of net income during 2018 and paid dividends of $75,000. Assume that net income was recognized evenly during 2018 and dividends were declared and paid evenly during 2018. Required:
Prepare a schedule to determine the amount of investment income to be reported by GMR during 2018 assuming that the equity method of accounting is applicable. Prepare a schedule to determine the balance in the investment account as of December 31, 2018 assuming that the equity method is applicable. Describe how the financial accounting and reporting would have differed if the equity method was not applicable. Describe how equity method investments are accounted for if GMR uses the fair value option of accounting for its investment. What will be an ideal response?
What is the total stockholders' equity based on the following data? Common Stock $360,000 Excess of Issue Price Over Par 735,000 Retained Earnings (Deficit) (56,000)
a. $1,095,000 b. $1,151,000 c. $1,039,000 d. $679,000
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What will be an ideal response?
Which of the following is true of a joint venture?
A) The parties to a joint venture are considered limited partners. B) Both parties to a joint venture have equal rights to manage the venture. C) A joint venture is a partnership that lasts for multiple projects. D) Parties to a joint venture are exempt from fiduciary duties to each other.