Question

Which of the following would be the most useful to establish in evaluating the recommendation of the consultant?

• A. Whether other markets, such as flour mills and power stations, would offer greater opportunities for potential profits.
• B. Whether the number of upright drive-belt motors at any single work place is greater than the number of pieces of equipment requiring cleaners on a single firm.
• C. How the ambient space quality in a upright drive-belt suction technology compares to the typical space quality in an commercial cleaning set-up.
• D. Whether the competition in the upright drive-belt suction technology sector would allow for profits similar to what those in the commercial cleaning equipment sector had been.
• E. Whether countries with expanding commercial sectors would use cleaning equipment similar to cleaners currently served by Clear-space.

Hint:

When evaluating business recommendations, focus on factors like competition, market demand, and profitability rather than peripheral issues.

Answer 1

The Correct Option is D

Step 1: Understand the context.
Clear-space is facing a decline in its profits and the consultant suggests that it could reverse this trend by modifying its vacuum cleaners to target the growing market for upright drive-belt suction technology. The key is determining if this new market could generate profits comparable to the declining market.
Step 2: Analysis of options.
- (A) Whether other markets, such as flour mills and power stations, would offer greater opportunities for potential profits: This is not directly related to evaluating the consultant's recommendation, which focuses on the potential profitability of expanding into the upright drive-belt suction technology sector.
- (B) Whether the number of upright drive-belt motors at any single work place is greater than the number of pieces of equipment requiring cleaners on a single firm: This would give specific data about demand but doesn’t directly address the question of profitability in the new market.
- (C) How the ambient space quality in an upright drive-belt suction technology compares to the typical space quality in a commercial cleaning set-up: This may be relevant to technical specifications but does not directly address profitability, which is the main concern of the consultant.
- (D) Whether the competition in the upright drive-belt suction technology sector would allow for profits similar to what those in the commercial cleaning equipment sector had been: Correct. This is the most relevant factor, as it directly compares the potential for profit in the new market to the previous market. If competition is similar, it might suggest that profits can be sustained or even improved.
- (E) Whether countries with expanding commercial sectors would use cleaning equipment similar to cleaners currently served by Clear-space: This option is less relevant because it focuses on international demand, not the profitability within the upright drive-belt suction technology market.
Step 3: Conclusion.
The correct answer is (D) because evaluating the competition in the new sector is crucial to determining if Clear-space can successfully enter and profit from this growing market.