GAMS corp. has successfully specialized for more than a decade in high-quality smartphones made along with the world-class suppliers such as Samsung. Its brand has a strong following and is recommended by influential technology experts. GAMSs main supplier of semiconductor has announced that the price for semiconductor will be 20% percent higher next year.

Select one:

a. GAMS probably operates on very thin margins, and a cost increase will threaten its ability to earn average returns.

b. Companies pursuing GAMSs business strategy are especially vulnerable to this risk.

c. GAMS will probably be able to pass the cost on to its customers because they are less sensitive to price increases than the average buyer.

d. If GAMS raises its smartphone prices, customers will turn to less expensive brands such as Xiaomi, Chinese smartphone manufacturer.