A Firm Plans to Use a Defensive Core Strategy of Optimize

question 31

Multiple Choice

A firm plans to use a defensive core strategy of optimize position,with the strategic objective of maximizing profits.Which of the following strategies is the firm most likely to implement as a part of its core strategy?

• A)enter new related markets
• B)reduce market focus
• C)develop new markets
• D)divest for cash flow
• E)harvest for cash flow

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Definitions:

Sunk Cost

Costs that have already been incurred and cannot be recovered or altered, and should not affect future business decisions.

Relevant Cost

Costs that will be affected by a decision in the future and therefore should be considered in decision-making processes.

Sell or Process Further

A decision-making process used in managerial accounting to determine whether it is more profitable to sell a product as is or process it further.

Incremental Revenue

The additional revenue generated from a new business action or decision, beyond the existing revenue stream.