If an Indian firm finds that a foreign multinational is entering the…

If an Indian firm finds that a foreign multinational is entering the Indian market with new substitutes, it can prepare itself to meet the threat by adopting which of the following measures:

(A) Improving the quality of the products

(B) Reducing cost of production

(D) Upgrading technology

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → (A), (B) and (D) only

A new foreign firm with new substitutes is a threat from the business environment. Such news should act as an early warning signal. The Indian firm can then prepare itself with fair measures, such as better quality and lower cost.

(A) Improving the quality of the products — A right measure (Correct). Better products help the firm keep its customers.

(B) Reducing cost of production — A right measure (Correct). Lower cost lets the firm sell at a lower price and still earn a profit.

(C) Engaging in aggressive advertising and making false claims — Not a right measure (Incorrect). Aggressive advertising is a known way to compete. But this statement adds making false claims. False claims cheat consumers and are an unfair trade practice. So the statement as a whole cannot be a proper measure.

(D) Upgrading technology — A right measure (Correct). Better technology is a fair way to compete. It improves quality and cuts cost.

NCERT (2026-27 Edition): “It helps the firm to identify threats and early warning signals: … Threats refer to the external environment trends and changes that will hinder a firm’s performance. Besides opportunities, environment happens to be the source of many threats. Environmental awareness can help managers to identify various threats on time and serve as an early warning signal. For example, if an Indian firm finds that a foreign multinational is entering the Indian market with new substitutes, it should act as a warning signal. On the basis of this information, the Indian firms can prepare themselves to meet the threat by adopting such measures as improving the quality of the product, reducing cost of the production, engaging in aggressive advertising, and so on.”