A popular food company, Crunchez Corp., is finding it difficult to retain its buyers as another food company, MidnightSnax Inc., has started to provide the same product with the same taste for a lesser price. Which of the following is a threat to Crunchez Corp.?
A)Cost push inflation
B)Supplier power
C)Switching cost
D)Unused production capacity

Question

Quizplus · Accepted Answer

The threat to Crunchez Corp. is switching cost. The fact that MidnightSnax Inc. is offering the same product with the same taste for a lesser price means that the customers can easily switch to buying from them, without incurring any additional cost or inconvenience. This puts pressure on Crunchez Corp. to either match the lower price or add value to their product in some other way in order to retain their customers. Cost push inflation, supplier power, and unused production capacity are not relevant in this scenario.

A Popular Food Company, Crunchez Corp