Compaq Computer's Decision to Charge Customers for Phone Technical Support

question 127

Multiple Choice

Compaq Computer's decision to charge customers for phone technical support to defray the high cost of phone support and encourage customers to read documentation was a failure because consumers like the human touch.Customer rebellion forced Compaq to rethink this policy.As a result Compaq decided to focus its resources on reaching the inexpensive home computer market segment through enhanced customer service.This company is engaging in:

• A) the search for a differential advantage
• B) control and evaluation
• C) alternative selection
• D) portfolio evaluation
• E) strategic planning

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Definitions:

Equilibrium Price

The price at which the quantity of a good demanded by consumers equals the quantity supplied by producers, resulting in a stable market condition.

Long-run Supply Curve

A graphical representation of the quantities of goods and services that producers are willing to offer for sale at different prices in the long run, when all inputs can be varied.

Marginal Cost Curve

A graphical representation showing how the cost to produce one additional unit of a good changes as production volume changes.

Break-even Point

The point at which total costs and total revenues are equal, meaning a business or project is neither making a profit nor a loss.