BBM Corporation's Managers Are Attempting to Build a New Product

question 34

Multiple Choice

BBM Corporation's managers are attempting to build a new product, a better mousetrap. They began by determining the features customers wanted and what they would pay for those features. BBM's engineers then reverse-engineered a competitor's product to understand its design and related production processes. Their analysis indicated that customers would pay $10.00 for a better mousetrap.
Why was it important for BBM's engineers to understand the product design and production processes of its competitor?

• A) Most of the mousetrap's product costs are committed by that point in the value chain
• B) They needed to explain them to customers to justify the better mousetrap's cost
• C) The better mousetrap will only succeed if it is identical to their competitor's product
• D) Understanding product design and production processes is not typically important; the engineers just wanted to better understand the process

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Definitions:

Expense-Related Activities

Actions or operations that incur costs or expenses in the course of business operations or project execution.

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)

A financial performance measure that calculates a company's profitability before deductions for interest, taxes, depreciation, and amortization.

Net Income

Indicates what is left after all costs, expenses, and taxes have been paid.

Current Assets

Cash and other assets that can be converted into cash within a year.