Unit 6: Market and Crisis Management - Practice Quiz

1 What is a market in business?

2 What is the main purpose of marketing management?

3 In which market do individuals purchase products for personal use?

4 Which market consists mainly of organizations buying goods for production?

5 Which service is an example of marketing assistance?

6 How can a government trade fair assist a new entrepreneur?

7 Which element of the marketing mix refers to what customers pay?

8 Which market strategy involves dividing customers into groups with similar needs?

9 Which marketing activity communicates product benefits to customers?

10 What is a raw material crisis?

11 Which action can reduce the risk of a raw material crisis?

12 Which situation is an example of a production crisis?

13 Which measure helps prevent production interruptions caused by equipment failure?

14 What commonly characterizes a leadership crisis?

15 Which event can create a market crisis for a business?

16 What should a business do first when customer demand changes sharply?

17 Which situation indicates a financial crisis?

18 Which practice can help a business manage a financial crisis?

19 Which event is classified as a natural crisis?

20 Which preparation can help a business respond to a natural crisis?

21 A startup discovers that many urban professionals need healthy lunches, can afford them, and are willing to subscribe to a delivery service. Which marketing concept does this finding best demonstrate?

22 A furniture manufacturer defines its market as "people who want comfortable home-working spaces" instead of "people who buy office chairs." What is the main advantage of this definition?

23 A company sells specialized packaging machines to food-processing firms, which use the machines in their production operations. In which type of market is the company primarily operating?

24 Several farmers sell nearly identical wheat to many buyers, and no individual farmer can significantly influence the prevailing price. Which market structure best fits this situation?

25 A small handicraft enterprise wants to begin exporting but does not understand overseas documentation, quality standards, or buyer identification. Which assistance would be most useful initially?

26 A microenterprise has a good product but cannot afford its own retail network. Which form of marketing assistance would most directly improve product availability?

27 A local soap producer targets customers with sensitive skin and promotes a fragrance-free formula that competitors do not offer. Which market strategy is being used?

28 A beverage company introduces its existing fruit drink into two neighboring states using new distributors, without changing the product. Which growth strategy does this represent?

29 A bakery depends on one flour supplier. After a transport strike interrupts deliveries, production may stop within three days. Which immediate response is most appropriate?

30 A manufacturer frequently faces shortages because a critical component has a long and uncertain delivery time. Which preventive action would best reduce this risk?

31 A machine failure stops a factory's main production line while several customer orders are due. What should the operations manager do first?

32 A food company finds that one production batch may be contaminated, but later batches passed inspection. Which response best limits harm without unnecessarily stopping all operations?

33 A firm's founder suddenly becomes unavailable during an important contract negotiation, and managers receive conflicting instructions. Which measure would best stabilize the organization?

34 Employees lose confidence after senior managers publicly blame one another for declining performance. What should the leadership team do to rebuild trust?

35 Demand for printed planners falls sharply as customers shift to digital planning applications. Which response best addresses the underlying market crisis?

36 A false social-media claim causes a sudden decline in sales of a packaged food brand. What is the most effective initial market response?

37 A profitable business cannot pay suppliers this month because customers are taking much longer to settle invoices. Which action most directly addresses the immediate problem?

38 A company reports rising sales but repeatedly runs out of cash because it holds excessive inventory and offers generous customer credit. Which control would be most appropriate?

39 A flood warning is issued for an area containing a firm's warehouse and employee housing. Which action should receive the highest immediate priority?

40 A coastal enterprise wants to reduce operational disruption from future cyclones. Which preparedness measure offers the strongest business continuity benefit?

41 A firm is testing whether a candidate product market is appropriately defined. Its current contribution margin is 40% of price. A hypothetical monopolist could impose a 5% price increase, which is estimated to reduce quantity demanded by 8%. Using critical-loss analysis, what conclusion is most appropriate?

42 A software venture identifies 10,000 firms that could theoretically use its product. Regulatory requirements permit service to 60% of them. Its present distribution partners can reach 25% of those eligible firms, and the expected conversion rate is 20%. What is the venture's initial serviceable obtainable market in customers?

43 Five firms have market shares of 35%, 25%, 20%, 10%, and 10%. The two smallest firms propose a merger. What are the post-merger Herfindahl-Hirschman Index and the change in the index?

44 A price-taking firm operates where price equals marginal cost at its profit-maximizing output. At that output, price is ₹46, average variable cost is ₹42, and average total cost is ₹55. Assuming fixed costs are unavoidable in the short run, which decision is economically correct?

45 A small exporter receives a large order from a politically unstable country. The buyer offers an irrevocable letter of credit issued by a local bank, but the exporter doubts that bank's ability to transfer funds. Which marketing assistance best addresses this exposure?

46 An enterprise has strong online demand inquiries but repeatedly loses export orders because its packaging fails destination-country labeling and safety requirements. Its assistance budget can fund only one intervention before the next trade fair. Which intervention has the highest strategic priority?

47 A venture must target one customer segment. For segment A, price is ₹120, variable cost is ₹70, acquisition cost is ₹20, and the return probability is 10%. For segment B, the corresponding values are ₹100, ₹55, ₹12, and 2%. A returned order contributes zero, while acquisition cost is always incurred. Which segment should be selected based on expected contribution per acquired customer?

48 A new communication platform has near-zero marginal cost, strong network effects, and valuable paid complements. Customer utility rises sharply with the number of active users. Which launch strategy best aligns pricing with these economics?

49 A manufacturer relies on one raw-material supplier. A disruption has a 20% annual probability and would cause a ₹500,000 loss. Dual sourcing costs ₹40,000 annually and reduces disruption probability to 5%, without changing loss severity. For a risk-neutral firm, which choice minimizes expected annual cost?

50 A manufacturer buys a specialized aluminum alloy but hedges with standard aluminum futures. During a supply crisis, the futures price rises by 12%, while the alloy's delivered price rises by 30% because its fabrication premium and freight cost surge. What primarily explains the incomplete hedge?

51 Products X and Y use a crisis-constrained machine for 2 and 3 minutes per unit, respectively. Their throughput contributions are ₹60 and ₹75 per unit. The machine has 2,400 minutes available; demand is limited to 800 units of X and 500 units of Y, and all other resources are nonbinding. Which production plan maximizes throughput?

52 Traceability data show that a potentially dangerous defect may affect several production batches, but the exact boundary is still uncertain. Which immediate response best balances safety, continuity, and evidence preservation?

53 A founder-CEO becomes incapacitated during negotiations with lenders. No successor was formally designated, and senior managers possess overlapping informal authority. Which governance action should the board take first?

54 During a fast-moving operational emergency, the operations director orders continued production while the safety director orders an immediate shutdown. Employees begin following whichever instruction reaches them first. Which structural remedy is most appropriate?

55 A firm sells 10,000 units at ₹50 each, has variable cost of ₹30 per unit, and fixed cost of ₹150,000. Management considers a 10% price cut. Estimated price elasticity of demand is , so quantity is expected to rise by 6%. What is the likely effect on operating profit?

56 A producer's shipments to distributors remain stable, but retail sell-through has fallen for three months, distributor inventories have doubled, and return requests are increasing. Which interpretation and response are most appropriate?

57 A profitable firm has monthly credit sales of ₹1.2 million and faces an immediate liquidity shortage. It can reduce days sales outstanding from 75 days to 45 days without changing sales. Using a 30-day month, approximately how much cash would be released from receivables?

58 A company reports a current ratio of 1.8, yet it may miss payroll in two weeks because much of its inventory is obsolete and customers pay unpredictably. Which tool should management prioritize for crisis decisions?

59 A flood disables a company's only plant. Its critical customers require deliveries within 48 hours, while repairing the plant will take at least three weeks. Which prearranged continuity measure would most directly satisfy the recovery-time objective?

60 A warehouse faces an 8% annual probability of a flood causing a ₹500,000 loss. A mitigation project costs ₹18,000 annually and reduces the probability to 2% and the loss to ₹300,000. Insurance instead costs ₹28,000 annually and leaves a ₹50,000 deductible per flood. For a risk-neutral firm, which option has the lowest expected annual cost?