Which of the Following Is an Advantage of Cost Leadership

question 46

Multiple Choice

Which of the following is an advantage of cost leadership?

• A) It makes a firm following this strategy well positioned to withstand price competition from rivals.
• B) The need for high sales volume requires low upfront investments in production and/or distribution capacity.
• C) In markets that involve a lot of brand loyalty, cost leadership companies command the largest share in the market.
• D) Low expenditure on market research helps firms following the cost leadership strategy to detect important environmental changes at a lower cost.
• E) Highly fragmented markets offer firms following this strategy greater opportunities to attract a large segment of customers.

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Definitions:

Normal Good

An item whose demand escalates as the income of consumers increases, and contracts when their income decreases.

Successively Less

Refers to a situation or process where there is a gradual decrease in quantity, quality, or intensity over time.

Satisfaction

A measure of how goods, services, or outcomes meet or exceed expectations, often related to customer or user experience.

Land Market

The input/factor market in which households supply land or other real property in exchange for rent.