A Generic Business Strategy Is More Likely to Help a Cost-Leadership

question 24

Multiple Choice

A generic business strategy is more likely to help a cost-leadership firm achieve competitive advantage when it does which one of the following?

• A) Allows a firm to perform similar activities differently than its rivals with resulting lower costs
• B) Allows a firm to perform different activities than its rivals with greater value creation
• C) Allows a firm to perform similar activities than its rivals with greater costs or lower value creation
• D) Helps a firm create as large a gap as possible between the differential value created and the cost required

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Definitions:

Absorption Costing

An approach in financial accounting that wraps all expenses incurred in manufacturing including direct materials, direct labor, and all overhead (variable and fixed), into the product's cost.

Net Operating Income

The total revenue of a business minus its operating expenses, excluding taxes and interest.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, labor, and both variable and fixed overhead - in the cost of a product.

Net Operating Income

An entity’s income after all operating expenses have been deducted from total revenue, excluding taxes and interest charges.