Which of the Following Is TRUE About the Threat of Substitutes

question 62

Multiple Choice

Which of the following is TRUE about the threat of substitutes?

• A)When threatened by substitutes,existing competitors will increase their prices.
• B)Innovation makes an existing product or service more attractive to its customers.
• C)If there are numerous substitutes,the firm's profit margins and revenues will decline.
• D)If the competitors are strong,existing competitors will not react strongly to the threat of substitutes.

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Definitions:

External Failure Cost

Costs incurred when products or services fail to meet quality standards after being delivered to the customer, including returns, repairs, and lost sales.

External Failure Cost

External failure costs are expenses incurred when products or services fail to meet quality standards after being delivered to the customer, including returns, repairs, and lost sales.

Value-Added

The enhancement a company gives its product or service before offering the product to customers, increasing its value.

Non-Value-Added

Activities or processes that consume resources but do not add value to the product or service from the customer's perspective.