In January 2011, Coca-Cola and Pepsi Agreed to Reduce Their

question 21

Multiple Choice

In January 2011, Coca-Cola and Pepsi agreed to reduce their yearly advertising budgets by $1 million each, and neither firm reneged on the agreement throughout the year. In January 2012, Coca-Cola and Pepsi each announced that their company 2011 profits had increased by $1 million. Which of the following is a likely explanation for this increase?

• A) A new entrant in the market caused Coca-Cola and Pepsi to lose substantial market share.
• B) The government imposed a punitive tax on both firms for producing a beverage that is a danger to public health.
• C) The firms had previously been in a prisoner's dilemma situation where one firm's advertisements were effectively canceling the other firm's advertisements.
• D) Coca-Cola drastically reduced the price of its soda relative to the price of Pepsi's soda.
• E) Pepsi drastically reduced the price of its soda relative to the price of Coca-Cola's soda.

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Definitions:

Tall Organizations

A type of organizational structure characterized by a large number of hierarchical levels, each with a narrow span of control.

Chain Of Command

The official hierarchy in an organization that dictates the order of authority and responsibility.

Human Resource Perspective

An organizational viewpoint that emphasizes the importance of human resources in achieving business success and considers employees as assets to be valued and developed.

Contextual Engagement

The process of actively participating in a situation or activity in a way that is informed by and sensitive to the surrounding context.