Which of the Following Is Not a Way to Sustain

question 49

Multiple Choice

Which of the following is not a way to sustain price- based advantage?

• A) Having deep pockets to fund a price war
• B) Cross subsidising the low margin business from other parts of the business portfolio
• C) Focusing on markets where high product/service value is appreciated by customers
• D) Having organisationally specific capabilities which drive down cost throughout the value chain
• E) Selling higher volumes at reduced margins

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Definitions:

Financial Leverage

The use of borrowed money (debt) to amplify the potential return of an investment or project.

Debt/Equity Ratio

The indicator that compares the role of debt and equity in financing company assets.

Financial Leverage

The use of borrowed money to increase the potential return of an investment, which also increases the risk of loss.