Only two companies manufacture Product A. The finished product is identical regardless of which company manufactures it. The cost to manufacture Product A is US $1, and the selling price is US $2. One company considers reducing the price to achieve 100c'% market share but fears the other company will respond by further reducing the price. Such a scenario would involve a:
- No-win strategy.
- Dual-win strategy.
- One win-one lose strategy.
- Neutral strategy.
Answer(s): A
Explanation:
If bath firms reduce the selling price of Product A, neither will gain sales and the resultant price war will cause bath firms to earn lower profits. This outcome is inevitable when reduced profit margins do not result in a significant increase in sales. The effect is a no-win strategy. A bank has two drive-in lanes to serve customers: one attached to the bank itself and one on an island. One teller serves bath stations. The bank is interested in determining the average waiting times of customers and has developed a model based on random numbers. The two key factors are the time between successive car arrivals and the time customers wait in line. Assume that the analysis begins with cars just arriving at bath service windows. bath requiring 3 minutes of service time. Car 1 is the attached window attached to the bank unless that window has more cars waiting than the island window. The lone teller will always serve the car that arrived first. If two cars arrive simultaneously, the one at the attached window will be served before the one at the island.