Final answer:
When customer needs change, organizations must adapt and 'change with them' by modifying their offerings or production processes. This adaptability is crucial for maintaining customer satisfaction and competitive advantage. Firms employ innovation and flexibility in response to changing market demands to secure profitability. The correct option is 3.
Step-by-step explanation:
Many of today's organizations are being designed around pleasing the customer at a profit. These firms understand that customer needs are not static; they evolve over time. To stay competitive and maintain profitability, a company must respond to these changes. Therefore, when customer needs change, firms must change with them. This means they might need to expand or reduce production, open new factories or sales facilities or close them, or start selling new products or stop selling existing ones.
To maintain a competitive edge, as illustrated by Gregory Lee, CEO of Samsung, firms must engage in the relentless pursuit of innovation to offer products that consumers desire, thus keeping the offerings relevant and desirable. This flexibility and adaptability in responsive product development and market strategy allow businesses to capitalize on temporary advantages over competitors and earn above-normal profits before the competition catches up.
While changing to meet customer needs might seem like an option, raising prices or finding new customers often isn't feasible due to 'menu costs' and the risk of customer dissatisfaction. Therefore, adapting to customer needs is often the most strategic approach to ensure long-term profitability and market presence.