Market Circumstances That Make a Focused Low-Cost or Focused Differentiation

question 53

Multiple Choice

Market circumstances that make a focused low-cost or focused differentiation strategy attractive are characterized by

• A)a target market niche that is too small to be profitable and offers low growth potential.
• B)an industry has few or no segments and market niches, thereby precluding the choice of an attractive niche suited to a company's resource strengths and capabilities.
• C)high costs or increased difficulty for multisegment rivals to meet the specialized needs of the target market niche and at the same time satisfy the expectations of their mainstream customers.
• D)intense competition from industry leaders in the niche or focused segment.
• E)few, if any, rivals are attempting to specialize in the same target segment.

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Definitions:

Equity Securities

Financial instruments representing ownership interest in a company, such as stocks, which provide an equity stake to investors.

Equity Method

An accounting technique used to record investments in associate companies, recognizing the investor's share of the earnings as income.

Dividends

Payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders.

Investment

The action of deploying resources (such as capital) with the expectation of generating an income or profit.