What Advice Would You Give to a Firm That Wants

question 26

Multiple Choice

What advice would you give to a firm that wants to exploit network effects?

• A) Charge heavy license fee for new technology.
• B) Refrain from using technical standards.
• C) Create incentives for other firms to develop complementary products.
• D) Do not use aggressive marketing strategies for killer applications.
• E) Increase switching costs.

---

Definitions:

Cash

Liquid assets held by a company, used to settle debts, purchase goods and services, or meet immediate needs; a fundamental indicator of financial health.

Debt Ratio

A financial ratio that measures the proportion of a company's total debt to its total assets, indicating the company's leverage.

Liabilities

Financial obligations or debts owed by a business to external parties or individuals, which must be settled over time through the transfer of economic benefits.

Equity

The ownership interest in a company of its shareholders; it represents the amount of assets that would be returned to shareholders if all the company's debts were paid off.