Which of the Following Is Regarding How a Differentiation Strategy

question 12

Multiple Choice

Which of the following is regarding how a differentiation strategy can help a firm to improve its competitive position vis-à-vis Porter's five forces?

• A) By increasing a firm's margins, it avoids the need for a low-cost position
• B) It helps a firm to deal with supplier power and reduces buyer power since buyers lack comparable alternatives
• C) Supplier power is increased because suppliers will be able to charge higher prices for their inputs
• D) Firms will enjoy high customer loyalty, thus experiencing less threat from substitutes than its competitors

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity and operational efficiency.

Straight-Line Depreciation

A way of allocating the financial burden of a material asset over its effective lifespan in identical yearly portions.

Discount Rate

The interest rate used to discount future cash flows to present value to account for risk and time value of money.

Working Capital

The gap between a firm's current assets and its current liabilities, showcasing its short-term financial stability.