The Integration of a Cost Leadership Strategy and a Differentiation

question 51

Multiple Choice

The integration of a cost leadership strategy and a differentiation strategy leads to a competitive advantage because:

• A) the managers have greater flexibility in the actions they can take.
• B) different firms need different types of strategies to be successful.
• C) it allows the firm to offer two types of value-some differentiated features and a relatively low cost.
• D) one strategy is not enough for most large firms.

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Definitions:

Revenue Test

A criterion used to determine when revenue is recognized in the accounting records, based on the completion of a revenue-generating process or event.

Asset Test

A measure used to evaluate a company's ability to meet its short-term liabilities with its most liquid assets.

Profit (Loss) Test

A financial assessment to evaluate the profitability or loss of a business operation or investment.

Return on Total Assets

A financial ratio that measures a company's profitability relative to its total assets.