Maverick Systems Inc.is a leading company in the mobile phone market,and profits from its mobile phones are very high.Maverick Systems has developed a new generation of smartphones,which is better than its existing line of smartphones,and has decided to embrace cannibalization of its existing line of smartphones.This means that the company is going to:
A) introduce the new technology right away and increase its market lead while taking away profits from its existing line of smartphones.
B) delay introduction of the next generation product until profits have begun to significantly decrease for the existing line of smartphones.
C) use up most of its financial resources in promoting the new phone.
D) wait for the existing line of smartphones to become obsolete and then introduce the new generation of smartphones into the market.

Question

Quizplus · Accepted Answer

Maverick Systems Inc. has the opportunity to increase its market lead and profits by introducing the new generation of smartphones right away. Delaying the introduction of the new technology until profits have significantly decreased for the existing line of smartphones (B) would only result in missed opportunities and potentially lower profits. Using up most of its financial resources in promoting the new phone (C) could also be risky and not necessarily the best use of resources. Waiting for the existing line of smartphones to become obsolete (D) could also result in missed opportunities and potentially lower profits. Therefore, embracing cannibalization and introducing the new generation of smartphones right away (A) would be the best choice for the company.