Question

While most of Savvy Inc.'s competitors were moving toward developing and emerging markets, Savvy Inc. decided to keep its operations limited to its home country so that it could gain some advantage. A few years later, however, Savvy Inc. lost its footing in the home market due to a sharp fall in demand. It then decided to invest in large-scale operations in the same developing nations as its competitors, within a short period of six months. However, its costs kept increasing, so it could not compete against the already established brands. In this scenario, the failure of Savvy Inc. can be best attributed to ___________.

a. time compression diseconomies.b. better expectations of future resource value.c. economies of scale.d. resource mobility.

Answer 1

a. time compression diseconomies.

Step-by-step explanation:

In this scenario, the failure of Savvy Inc. can be best attributed to time compression dis-economies.

Time compression diseconomies refers to the costs that a firm pays for wanting to grow sporadically rather than organically.

Normally growth is achieved over time for it to be manageable and sustainable but certain firms just cannot wait and wants to compete with already established brands in the market.

In the scenario, Savvy Inc. decided to invest in LARGE SCALE OPERATIONS in a new market it was entering, rather than starting small and growing into large operations with time, and that mistake led to time compression diseconomies.

Answer 2

a.

Step-by-step explanation:

Based on the scenario being described within the question it can be said that the failure of Savvy Inc. can be best attributed to time compression diseconomies. These are inefficiencies that occur when things are done faster than intended, therefore by rushing the investment due to economic circumstances, the company was not able to anticipate aspects that they would have otherwise anticipated.