Zach is a franchisee with Digger's Doggies, a chain of hotdog shops. He was doing well until several other Digger's Doggies franchisees got in trouble and were forced to close their shops. Soon afterward, Zach's business declined and was also forced to close.

This is an example of:

A. management by exception.

B. an economic shakeout at work.

C. the coattail effect.

D. the law of diminishing returns.

C. the coattail effect.

Explanation:

-Management by exception refers to reviewing the results of a company and presenting the issues to the management only if they represent big differences from the expected results.

-An economic shakeout at work refers to the situation in which an industry consolidates and businesses are eliminated by the competition.

-The coattail effect refers to the situation in which a franchisee is taken out of business as a consequence of the failure of other franchisees.

-The law of diminishing returns refers to a situation in which adding more factors of production generates smaller increases in the output.

According to this, this is an example of the coattail effect as Zach's business was forced to close as a consequence of what happened with the other franchisees that had to close their businesses.

Answer: C. the coattail effect.

Explanation: Coattail effect refers to situations in which the actions of other franchises in one way or the other affects the success or failure of one particular franchise's business.