With Respect to Risk Response Strategies, Which of the Following

question 23

Multiple Choice

With respect to risk response strategies, which of the following would be a "risk sharing" approach?

• A)XYZ company enters the market as a provider of car insurance to high credit risk clients; however, they diversify their portfolio by targeting 40% of their marketing efforts to traditional "safe credit" customers.
• B)LGW Communications employs a series of manual and automated controls to manage inventory shrinkage (inventory going missing due to damage or theft)in an effort to keep inventory costs in line with industry standards.
• C)JLW Industries is a holding company with a division that specializes in high-risk offshore oil drilling.Given the recent Gulf oil spill and vicious backlash from consumers and politicians, JLW decides to divest itself of the oil drilling division.
• D)XYZ company is concerned that they do not have the capability to bring a new product to market, so they enter into a joint venture with ABC company; XYZ will handle design and marketing of the new product, while ABC will handle manufacturing and logistics.

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Definitions:

Entry

The act or process of entering into a market as a new supplier or producer, often facing barriers such as high startup costs or regulations.

Breaks Even

The point at which total costs and total revenue are equal, resulting in no net loss or gain.

Short Run

A time period during which at least one input, like plant size or capital, is fixed and cannot be changed, focusing on immediate operational decisions.

Scale of Production

The size or magnitude of manufacturing operations, which can influence costs, efficiency, and profitability.