For the Following Scenarios, State Whether the Strategic Effect of the Firm's

question 20

Essay

For the following scenarios, state whether the strategic effect of the firm's action will cause competitors to behave more or less aggressively, and why.
a.Sleep Country USA announces that it will beat any competitor's advertised price by 5%.
b.Termite Woods, a local, new home development, unexpectedly announces that it will decrease by 50% the number of homes it had planned to build in the coming year.
c.Used car dealership Roach Motors announces a 25% price cut on its entire stock.

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Definitions:

Cost of Goods Sold

An expense recorded on the income statement that reflects the total cost of producing or purchasing the goods that a company has sold during a specific period.

Cost of Goods Sold

Represents the total cost of all goods that were sold over a specific period, including the costs associated with production or purchase.

Gross Profit

The difference between revenue and the cost of goods sold (COGS), indicating the efficiency of a company in using its labor and supplies.

Net Sales

Revenue from sales transactions after deducting returns, allowances for damaged or missing goods, and any discounts offered.