Loyola Works for a Coffee Shop That Wants to Differentiate

question 128

Multiple Choice

Loyola works for a coffee shop that wants to differentiate itself from local competitors in order to boost its profits. Which of the following differentiation strategies would hurt the company rather than boost sales?

• A) Hire more staff
• B) Sell the coffee cups in which the beverages are served
• C) Offer a wider selection of international coffees and teas
• D) Provide customer incentives, including coupons and points
• E) Renovate the coffee shop so it has more space than other coffee shops in the area

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Definitions:

Discount Rate

The interest rate used in discounted cash flow analysis to calculate the present value of future cash flows.

Net Present Value

The variance between cash inflows' and outflows' current values during a certain period.

Discount Factor(s)

A numerical factor used to calculate the present value of future cash flows, reflecting the time value of money.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal installments, reflecting the asset’s gradual decrease in value.