Which of the following, if true, strengthens the argument for dropping

QUESTION

Which of the following, if true, strengthens the argument for dropping the traditional product line?

A) Faced with a shrinking market, competitors are dropping their comparable product lines.
B) If sales hold up, the company can harvest the product line by reducing costs associated with the plant and equipment, maintenance, R&D, and advertising.
C) Demand for traditional photographic products is still strong in other countries in which Lanen has an established presence.
D) Input costs are going to increase as a long-term component supply agreement is coming to an end.
E) The company has tried to find a buyer for the product line but has so far failed to negotiate an attractive price.

ANSWER

Answer: D
Explanation: D) A company will drop a product in the decline stage if management decides that the product will no longer yield acceptable profit margins. Choice D tells us that it is going to become more expensive to manufacture the traditional photographic products, which further erodes the attractiveness of the product line. Choice A actually points the other way, suggesting that Lanen could have a larger share of a smaller market. Choice B favors keeping the product line in a more limited way, not dropping it entirely. Choice C favors keeping the product line but focusing more on marketing it abroad. Choice E tells us that Lanen has so far not been able to find a buyer at the right price for the product line. This suggests that Lanen should explore options other than dropping the line.