XAT 2020 Question 33

Instructions

Read the situation below and answer the 3 associated questions:
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.

Question 33

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 e-commerce prices.
Which of the following is the BEST reason for The Small Shop NOT to reduce the current discount offered to the customers?

Solution

Taking a business decision just because of some words on a sign is not prudent; hence, option A can be rejected.

Option B can be ignored as the outside villagers form a very insignificant portion of the total revenues.

Option C can be rejected as even though the delivery fee has been charged since last year, it has not improved The Small Shop's business.

Option D does not mention the kind of business that is being started by the mentioned person.

Option E is the best choice, as the villagers form the majority of the shop's business and if they prefer the shop from e-commerce, then it is a reason to keep the discount.

Hence, the answer is option E.



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