Peerless Inc., a large conglomerate, wants to liquidate its business in certain industries to improve its overall profitability. Which of the following industries would Peerless Inc. find it most difficult to exit?
A) the management consultancy industry in which the company's fixed costs are low
B) the steel industry in which the company has obligations like severance pay toward employees
C) the corporate training industry in which the company's commitments are mostly short-term
D) the e-commerce industry where the company has no long-term contractual agreements with suppliers

Question

Quizplus · Accepted Answer

Peerless Inc. would find it most difficult to exit the steel industry in which the company has obligations like severance pay toward employees. Exit barriers are comprised of both economic and social factors. A company exiting an industry may still have contractual obligations to suppliers, such as employee health care and retirement benefits, as well as severance pay.