If an oil company has been losing money for years when they were trying to drill for the oil, transport it to their factory, and then process it into oil that can be sold to other countries , but now they decide to sell the old oil drilling equipment and pipelines to move the oil, and instead just invest in new updated equipment for the processing factory. What does this tell us about the company?

Question

a.They invested in human capital
b.They decided to specialize.
c.They invested in entrepreneurship.
d.None of the above

Answer 1

The company's decision to sell old oil drilling equipment and pipelines while investing in updated equipment for the processing factory indicates that they have chosen to focus on a specific area of their operations where they may see more potential for profit or efficiency. This suggests that they are concentrating their resources and efforts on the processing aspect of their business, rather than the upstream activities of drilling and transportation.

Given these considerations, the best answer is:

b. They decided to specialize.

This reflects their shift in strategy to concentrate on a narrower part of their business, likely in response to the losses they experienced in the drilling and transport segments.