Use the Following to Answer the Questions

question 167

Multiple Choice

Use the following to answer the questions.
A new U.S.automobile company,Specialty Motors,was established in 2004.In 2008,a recession caused disposable income to decline,and the annual amount of dollars spent by consumers for automobiles dropped drastically.Specialty Motors faced the problem of trying to determine whether the economy would turn toward prosperity or toward depression.No matter what happened,Specialty Motors was also worried about an impending global steel shortage,which would make a big difference in its future marketing plans.The economy might recover from the recession,but the automobile makers might be forced to ask consumers to curtail consumption just when the hope of a better year was finally in sight.All in all,the future looked dismal for Specialty Motors.
-Refer to Scenario 3.2.If the economy recovers in the future and enters the prosperity phase of the economic cycle,what actions should Specialty Motors take?

• A) Emphasize the value and basic functionality of their products.
• B) Develop more distribution outlets and increase promotion.
• C) Significantly reduce advertising expenditures to create an exclusive image.
• D) Decrease production of current product lines and slow development on new product lines.
• E) Significantly reduce the prices on the company's product offerings.

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Definitions:

Investment Centers

Segments within a company for which managers have responsibility over cost, revenue, and investment decisions.

Cost Center

A business segment whose manager has control over cost but has no control over revenue or investments in operating assets.

Responsibility Center

Any business segment whose manager has control over costs, revenues, or investments in operating assets.

Buying Division

A segment within a company responsible for purchasing products, materials, and services required for the company’s operations.