Identify the Effects of Cost Structure and Operating Leverage on the Sensitivity

question 92

Essay

Identify the effects of cost structure and operating leverage on the sensitivity of profit to changes in volume.Use a nuclear power plant and an ice cream store as examples.

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Definitions:

Threat of Substitute Products

The potential risk that consumers might replace a company's product with similar goods or services from another provider.

Degree of External Competition

The extent of competition that a business faces from other companies within the same industry or market.

Operational Growth

The expansion of a company's operational capacity, often leading to increased output, efficiency, or market share.

Strategic Planning

The process of defining an organization's strategy or direction and making decisions on allocating resources to pursue this strategy.