Managing for long-run profits implies that a company
A) will give up immediate profit in exchange for achieving a higher market share in hopes of penetrating competitive markets.
B) will maintain a given price range to ensure there is no loss of customers over time, even if the profit margin declines.
C) all profits will be invested in bonds or other certificates of deposit in order to counteract any drastic economic changes in the future.
D) all profits will be reinvested into market research or product research rather than returned to shareholders.
E) all products, product lines, or divisions that cannot maintain their pricing goals will be dropped.

Question

Quizplus · Accepted Answer

Managing for long-run profits means making strategic decisions that sacrifice short-term gains for long-term success. In choice A, the company is willing to give up immediate profit in exchange for achieving a higher market share, which can lead to long-term profitability. This approach requires investing in marketing, product development, and other initiatives that might not show an immediate return but can help the company dominate the market over time. The other choices do not fully capture the idea of managing for long-run profits. B focuses on maintaining a given price range, which is important but not sufficient for long-term success. C is about risk management and financial planning, which is important but not necessarily tied to long-term profits. D is about reinvesting profits, but the focus is on research rather than the broader goal of long-term profitability. E is about dropping unprofitable products, which is important but does not fully capture the idea of managing for long-run profits.

Managing for Long-Run Profits Implies That a Company