Significant loss of market - MGMAT

[mehravikas]

Company X experienced a significant loss of market share over a number of years. To strengthen its market position, the company decided two years ago to increase the percentage of total revenue devoted to research and development. The following year, the company's market share increased by 10 percent. In response, company management further increased the amount of money devoted to research and development.

Which of the following investigations is most likely to yield significant information that would help evaluate whether the company's decision to further increase the research and development budget was warranted?

A. Determining how many new products the company has created over the past year
B. Determining the percentage of revenue that other companies devote to research and development
C. Determining whether any of the company's competitors have withdrawn from the market in the past two years
D. Determining the maximum percentage of revenue that the company can devote to research and development without affecting the company's production budget
E. Determining whether all of the company's new products have fared equally well in the marketplace


OA: C
Source: MGMAT

[scoobydooby]

market share: company's sales/ total industry or market sales

to evaluate whether increase of R&D budget helped increase the companys market share

A.out of scope. new products have no bearing on company market share

B. out of scope. other companies' R&D budget allocation cannot determine if the given company's increased R&D allocation helped improve the market share

D. out of scope. we need to find if the increased R&D
allocation was responsible for the improved market share

E. out of scope.

C-correct, as an "yes' answer to this question identifies an alternate cause for the increase in the company's market share=>improved R&D allocation not responsible. a "no" answer supports company's decision.

[kris77]

It seems to me that the right answer is C