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

QUESTION

Which of the following, if true, strengthens the argument for operating company-owned outlets in China?

A) Traditionally, Chinese consumers have favored home-cooked meals.
B) In China, credit cards are becoming a more generally accepted form of payment.
C) Chinese consumers tend to be more price conscious than their American counterparts.
D) Many regions in China have relaxed regulations requiring local participation in management.
E) Most American fast food chains have opted for the franchise model in China.

ANSWER

Answer: D
Explanation: D) The company-owned model may not be available as an option if government regulations require some degree of local participation in management. But if Choice D is true, then those regulations will be less of a factor in this case; therefore, Choice D strengthens the case for the company-owned approach. Choice A provides a reason not to expand into China at all. Choices B and C provide general information about the Chinese market but do not help resolve the question of company-owned outlets vs. franchises. Choice E, if anything, suggests that the franchise approach is a safe bet.