The Typical Risks of a Cost Leadership Strategy Include

question 32

Multiple Choice

The typical risks of a cost leadership strategy include:

• A) the inability to balance high differentiation and low price.
• B) production and distribution processes becoming obsolete.
• C) excessive differentiation to the point where the customer base is too small.
• D) loss of customer loyalty.

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Definitions:

Financial Viability

The ability of an entity to generate sufficient income to meet operating payments, debt commitments, and, where applicable, to allow for growth, while maintaining a solid financial position.

Precludes

Prevents from happening; makes impossible.

Conflicting Investment

Investments that present opposing outcomes or decisions in a portfolio, often leading to a prioritization decision for optimal allocation.

NPV Rule

A principle stating that an investment should be made if its net present value is positive, as it's expected to add value to the firm.