If a Supplier Perceives That a Firm Will Switch to Another

question 116

Multiple Choice

If a supplier perceives that a firm will switch to another supplier in response to changes in exchange rates,trade barriers,or general political circumstances,that supplier might not be willing to make specialized investments in plant and equipment that would ultimately benefit the firm.This example demonstrates:

• A)the downside to strategic flexibility.
• B)the downside to lowering costs.
• C)the upside of offsets.
• D)the downside of improved scheduling.

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Definitions:

Operating Activities

Business activities directly related to the production, sale, and delivery of a company's products or services, generating the majority of its revenue and expenses.

Cash Dividends

Cash dividends are payments made by a corporation to its shareholders, usually as a distribution of profits.

Free Cash Flow

A measure of financial performance calculated as operating cash flow minus capital expenditures, representing the cash that a company is able to generate after spending the money required to maintain or expand its asset base.

Capital Expenditures

Funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment.