Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
By analyzing historical market trends without considering current uncertainties
B
By calculating potential profits while disregarding competitor actions
C
By evaluating both market equilibrium factors and the risks associated with market entry
D
By relying solely on government regulations for guidance
Understanding the Answer
Let's break down why this is correct
Answer
When a firm considers entering a new market, it must first understand the risks involved, especially since the market can be unpredictable. The firm should gather information about the market conditions, customer preferences, and potential competitors. This helps the firm identify possible challenges and opportunities, allowing them to weigh the benefits against the risks. For example, if a company wants to sell a new product in a foreign country, it should research local laws, cultural differences, and existing products that are similar. By carefully analyzing this information, the firm can make an informed decision that aims for the best outcome while minimizing potential losses.
Detailed Explanation
A firm should look at both the market conditions and the risks involved. Other options are incorrect because This option suggests only looking at past trends; Focusing only on profits ignores what competitors might do.
Key Concepts
market equilibrium
risk assessment
decision-making under uncertainty.
Topic
Finding Optimal Choices
Difficulty
hard level question
Cognitive Level
understand
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