XAT 2020 Question 35

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 35

An emerging brand offers a franchise to The Small Shop for repairing its products, on a condition that other brands are not to be repaired. Repairs currently account for 15% of its revenues.
Which of the following, if true, will BEST help The Small Shop to decide on the franchise?

Solution

The Small Shop will be convinced to take up the offer if it has long-term benefits for the shop.

Option A will lead to the shop losing two employees for 3months. This will cause a problem for the proper functioning of the shop for those months. Thus, it will not encourage the owner to take the deal.

Option B will not encourage the deal as it will be a great risk as the brand is very new.

Option D is not related to the decision.

Option E is convenient for the shop but does not show that the business will improve. It just talks about maintaining the status quo.

Option C is the best option as it shows that the revenues from repairing are going to increase every year. This will encourage the shop in taking the deal.

Hence, the answer is option C.



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