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ACCA Applied Knowledge · Business and Technology · Technological factors

A music retailer that sold CDs through shops now offers subscription-based streaming and has closed most of its stores. Which statement BEST describes the effect of technology on its product?

The product has become digital. Streaming delivers music over the internet, so the retailer no longer needs to hold physical stock or maintain many shops, which lowers distribution and inventory costs. It has not become more tangible or a manufacturing business.

  1. AThe product has become digital, which lowers distribution costs and removes the need for physical inventoryCorrect
  2. BThe product has become more tangible, increasing inventory holding costs
  3. CThe business has moved from a service to a purely manufacturing operation
  4. DTechnology has no effect on the nature of the product offered

Explanation

Streaming turns the product into a digital one delivered over the internet, so there are no physical copies to store or ship, lowering distribution and inventory costs. The other options reverse or deny this change.

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