XAT 2020 — Decision Making Question 14
Read the following paragraph carefully and answer the question that follows:
The Small Shop, selling computer peripherals, is the only one of its kind in the remote village of Turturunk. Because online purchases take two weeks or more to arrive, The Small Shop is a quick stop for buying items such as pen drives and USB cables. Besides selling computer peripherals, The Small Shop also undertakes repairs of out-of-warranty products.
The Small Shop which earlier recorded an annual increase of approximately 12% in revenues has been stagnating at 4% for the last three years, during which e-commerce sidelined brick and mortar outlets. The shop is struggling to increase profitability. In general, The Small Shop has been offering a discount on MRP to compete with ecommerce prices.
Which of the following is the BEST reason for The Small Shop NOT to reduce the current discount offered to the customers?
Answer & solution
- A
A large fading sign prominently placed behind the shop’s cash counter reads “in business and in life, always be fair”
- B
Recently customers from a nearby village have started shopping at The Small Shop for low-end peripherals, accounting for around 3% of the shop’s total revenues.
Even though e-commerce offers a greater range of choices, villagers prefer buying readily available products from The Small Shop.
- D
To cover insurance costs, e-commerce has begun charging a delivery fee from last year.
- E
A new resident who earlier worked in the computer hardware industry is contemplating starting a business in Turturunk.
Option 1 is not related to the discount and can be eliminated. Since other customers shop for low-end peripherals, it is not the best reason for not reducing the discount on all other products. Option 3 is the best reason as customers will readily buy discounted products as compared to waiting for a long-time to receive products from e-commerce websites. Option 4 talks about e-commerce while the question pertains to The Small Shop. Eliminate it. Option 5 is also incorrect as only contemplating starting a business does not imply that a new business will be opened.
Hence, option (c).