When Given a Choice Between a National Brand of Jeans

question 18

Multiple Choice

When given a choice between a national brand of jeans and a private-label brand, the buyer for a chain of mall specialty stores might choose the private-label brand:

• A) to increase its sales expenses
• B) to prevent its customers from comparison shopping
• C) to limit its store traffic to qualified buyers
• D) to increase its merchandising flexibility
• E) for all of these reasons

Recognize the risks and disadvantages associated with focused and low-cost strategies.

Understand how organizations apply differentiation strategies to stand out from the competition.

Comprehend the concept and importance of strategic choice in developing competitive advantage.

Know the characteristics of mechanistic and organic organizations and their implications for organizational design.

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Definitions:

Leverage

Utilizing borrowed funds or debt to enhance the possible returns from an investment.

EBIT

Earnings Before Interest and Taxes, a measure of a firm's profit that includes all expenses except interest and income tax expenses.

WACC

Weighted Average Cost of Capital, a calculation used to estimate the average cost of a company's financing including equity and debt, reflecting the risk of investments.

Unlevered Return

The return on an investment that has not been adjusted for the effects of leverage or borrowing.