Ayoub Is Considering Forgoing the Retail Side of His Business

question 50

Multiple Choice

Ayoub is considering forgoing the retail side of his business entirely. Instead, he will redirect his resources toward reselling hardware and software and providing systems integration services to governmental and industrial sectors. Such a move would be most representative of which one of Porter's generic strategies?

• A) Segmentation
• B) Stuck in the middle
• C) Niche
• D) Focus

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Definitions:

Variable Cost

Expenditures that fluctuate in accordance with production or sales figures, including costs for materials and workforce.

Fixed Costs

Expenses that do not change in relation to production volume or business activity level, such as rent or salaries.

Break-Even Point

The financial level at which total revenues equal total expenses, resulting in no net profit or loss.

High-Low Method

A technique used in accounting and finance to estimate fixed and variable costs based on the highest and lowest levels of activity.