Question

A cosmetics company is conducting a second-year review of one of its newest products. The marketing department expects that the firm will continue to earn profits from the sale of the product in the third year as it did in the past two years. Senior management, however, feels that the profit projections would vary based on other factors such as the price of the competitor's products, the actual level of sales, and the possibility of cost reductions. In other words, the senior management is undertaking _____.

Answer 1

Answer:

sensitivity analysis

Explanation:

According to my research on different business strategies, I can say that based on the information provided within the question the senior management is undertaking sensitivity analysis. This is a study of what kind of relationship exists between the inputs and outputs of a system and how much uncertainty exists between them. This is what the senior management is undertaking when determining different factors which might lead to different profit projections.

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