Final answer:
Defensive strategic market plans are often focused on protecting current market share and are more about maintaining rather than increasing sales revenue. In perfectly competitive markets, aggressive advertising can boost sales short-term but might not have a lasting impact. Businesses have more scope for increases in sales and production in the long run, with opportunities for expansion and growth.
Step-by-step explanation:
The statement that defensive strategic market plans promote short-run profit performance but are not that effective in growing sales revenue is generally true.
Defensive strategies often focus on maintaining current market positions, protecting market share, and maximizing short-term profits through cost reduction and efficiency improvements rather than on aggressive sales expansion.
In a perfectly competitive market, where the products are homogeneous, and there are no barriers to entry or exit, creating an aggressive advertising campaign can lead to a temporary increase in sales revenue, primarily by differentiating the product or increasing product awareness.
However, due to the nature of perfectly competitive markets, the impact of advertising may be short-lived as other firms can quickly replicate strategies, and consumers are typically price-sensitive.
Businesses do indeed operate in both the short run and the long run. In the short run, adjustments to production and operation can be limited and costly.
Conversely, in the long run, businesses have the flexibility to make more substantial changes such as building new factories, expanding their workforce, and increasing their store locations, allowing for growth and expansion of both production and sales revenue.