It's No Secret That Blockbuster™ Stores Are Closing,while Netflix™ Is

question 215

Multiple Choice

It's no secret that Blockbuster™ stores are closing,while Netflix™ is growing like gangbusters! Both companies participate in the video rental business.Netflix evaluated the lifestyle needs of video customers,understanding that time,family,and work obligations called for more convenient methods to receive video entertainment.Netflix embraced the opportunity to utilize the Internet,and TVs with special modems,to stream videos directly to customers.The company also managed to keep customer costs down,by passing along the savings it realized in labor.Blockbuster did not keep its eye on competitor movements,permitting Netflix to quickly capture video market share.In sizing up the situation,which external environments) probably had the least effect on Netflix's success?

• A)Social environment
• B)Competitive environment
• C)Economic and legal environment
• D)Technological environment

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Definitions:

Consolidated Financial Statements

Financial statements that aggregate the financials of a parent company with those of its subsidiaries.

Relevant Activities

Activities of the investee that significantly affect the investee’s returns.

Investee's Returns

Refers to the earnings gained from the investment in another entity, including dividends and value appreciation.

Single Economic Entity

A concept where a parent company and its subsidiaries are presented as one reporting entity in consolidated financial statements, ignoring the legal boundary that separates them.