Profits for one of Company X's flagship products have been declining slowly for several years. The CFO investigated and determined that inflation has raised the cost of producing the product but consumers who were surveyed reported that they felt the product‘s functionality didn’t justify a higher price. As a result, the CFO recommended that the company stop producing this product because the CEO only wants products whose profit margins are increasing.
The answer to which of the following questions would be most useful in evaluating whether the CFO's decision to divest the company of its flagship product is warranted?
A. Does the company have new and profitable products available with which to replace the flagship product?
B. Will the rest of Company X's management team agree with the CFO's recommendation?
C. Can Company X sell the flagship product to new markets to increase its customer base?
D. Are there additional features that could be added to the product without raising the unit price?
E. What percentage of Company X's revenues is represented by sales of the flagship product in question?
答案选D.
manhattan解释:
Profits for a particular product have been going down and the CFO has determined that this is because, on the one hand, the cost to make the product has increased and, on the other, consumers won't pay more than the current price (recall that Profit = Revenues – Costs). The CEO only wants Company X to sell products with increasing profit margins; as a result, the CFO decides the solution is to stop making this product. This decision would make sense only if we can be assured that there is no way to have an increasing profit margin for the product in question.
(A) Whether there are new, profitable products does not address the issue of whether there is a way to achieve increasing profit margins for the flagship product.
(B) Whether the management team agrees with the CFO's recommendation does not address the issue of whether there is a way to achieve increasing profit margins for the flagship product.
(C) While selling the product to more customers may increase the total revenues (and assumedly profits), this solution won’t address the profit marginof the product, and hence is out of scope.
(D) CORRECT. The argument says that customers “felt the product’s functionality didn’t justify a higher price.” If new features could be added to the product (without increasing the cost of the product) the company may be able to charge a higher price for the product, thus increasing profit margins for the product.
(E) The flagship product's revenues as a percentage of total revenues does not address the issue of whether there is a way to achieve increasing profit margins for the flagship product (although it does highlight why the company might find itself with a big problem if it follows the CEO's advice!).
求问各位大大 题干的逻辑是profit下降,cost上升,consumer觉得flagship的功能不值这个更高的priice(暗含price上升),因此要停产,除非它的利润率上升(profit margins);D选项说要增加F的功能性,却不提高单位价格?是什么意思?还有C选项答案解释说可提高总收益(包括利润),但不能提高利润率,又是啥意思.....完全搞不懂....了.......求大神!!跪求!!
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