Scenario 1-2 Chug Enterprises Is Planning to Create a New Line of Line

question 62

Multiple Choice

Scenario 1-2
Chug Enterprises is planning to create a new line of products and enter into the sports drink market.They plan to advertise the first product to teenagers as being the best-tasting sports drink in the market.The second product will be advertised to adults as being the lowest calorie sports drink one can buy.The third product will be advertised to senior citizens as containing calcium, a mineral needed to maintain a healthy bone structure.Each product will have separate, distinctive packaging.
-(Scenario 1-2) The company launched the third product for senior citizens in the Baltonian market and their efforts were highly successful.Chug Enterprises now plans to introduce it worldwide.However, the way senior citizens perceive products vary from culture to culture.Thus, Chug Enterprises should engage in:

• A)cooperative advertising.
• B)international advertising.
• C)national advertising.
• D)regional advertising.

---

Definitions:

Bankruptcy

A legal process through which individuals or businesses unable to meet their financial obligations can relieve their debts by transferring assets to a trustee.

Target Capital Structure

The optimal mix of debt, equity, and other financing sources that a company aims to achieve to minimize its cost of capital.

After-Tax Cost

The net cost of an investment after the reduction of any taxes that are applicable to it, reflecting the actual cost to the investor.

WACC

The Weighted Average Cost of Capital, a calculation of a firm's cost of capital in which each category of capital is proportionately weighted.