Which one of the following is not a characteristic of a firm that has chosen a captive company strategy?
A) It is most appropriate for a company with a strong competitive position in a growing industry.
B) The firm reduces its functional activities to reduce costs.
C) The firm gains a certainty of sales and production in return for becoming heavily dependent upon another firm for at least 75% of its sales.
D) One of its customers makes up a large percentage of the company's sales and wants the company to keep operating as its supplier.
E) Management desperately seeks an "angel" to guarantee the company's continued existence.

Question

Quizplus · Accepted Answer

A captive company strategy typically involves a firm becoming heavily dependent on a single customer for the majority of its sales, often in exchange for certain sales and production volumes. This strategy is not necessarily most appropriate for a company with a strong competitive position in a growing industry, as such a company might have multiple avenues for growth and diversification rather than relying on a single customer.

Which One of the Following Is Not a Characteristic of a Firm