If Cost-Leadership Strategies Can Be Implemented by Numerous Firms in an Industry

question 54

True/False

If cost-leadership strategies can be implemented by numerous firms in an industry, or if no firms face a cost disadvantage in imitating a cost-leadership strategy, then being a cost leader does not generate a sustained competitive advantage for a firm.

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Definitions:

Operating Leverage

An indicator of how increases in revenue lead to rises in operational profit, reflecting the company's balance of fixed to variable expenses.

Fixed Costs

Expenses that do not vary with production level or sales volume, such as rent, salaries, and insurance premiums.

Rent

Payment made by a tenant to a landlord for the use of a property.

Depreciation

The allocation of the cost of an asset over its useful life.