Which external factor is cited as a risk to market-driven strategies?

• A. Exchange rate fluctuations affecting imports.
• B. Seasonal demand variations in construction.
• C. Global geopolitical risks and market volatility.
• D. Local zoning restrictions.

Answer: (C)

Market-driven strategies rely on aligning decisions with external market signals, such as consumer demand and competitive dynamics. The main risk to this approach comes from broad, unpredictable external forces that can rapidly alter those signals across many markets. Global geopolitical risks and market volatility fit this perfectly: they can trigger sudden changes in demand, disrupt supply chains, shift financing conditions, and cause wide swings in prices and exchange rates. All of these make it hard to trust any single market signal and force frequent, potentially costly pivots in strategy.

The other factors are more targeted or predictable. Exchange rate fluctuations affecting imports influence costs and profitability, but they’re a financial/operational risk rather than the broad market signal risk that undermines a market-driven approach. Seasonal demand variations in construction are predictable patterns that can be planned for. Local zoning restrictions are regulatory constraints at a local level that affect feasibility, not the global market signals the strategy relies on.