To Initiate a Strategic Move That Allows a Firm to Open

question 14

Multiple Choice

To initiate a strategic move that allows a firm to open up new and uncontested market space through value innovation, managers must address four key questions when formulating a blue ocean business strategy. These questions focus on

• A) increasing cost and maintaining perceived customer benefits.
• B) lowering cost and maintaining perceived customer benefits.
• C) lowering cost and increasing perceived customer benefits.
• D) increasing cost and increasing perceived customer benefits.

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Definitions:

EBIT

Earnings before interest and taxes, a measure of a company's profitability that excludes expense and income from interest and taxes.

DFL

Degree of Financial Leverage, a ratio that measures the sensitivity of a company's earnings per share to fluctuations in its operating income, based on its capital structure.

ROCE

Return on Capital Employed; a financial ratio that measures a company's profitability and the efficiency with which its capital is used.

Financing Charges

Interest and other costs associated with borrowing funds or purchasing goods and services on credit.