An Integration Strategy Differs from a Low-Cost Strategy in That

question 29

Multiple Choice

An integration strategy differs from a low-cost strategy in that:

• A) The intent of an integration strategy is not to be the absolute lowest-cost provider because of the added costs of increased value in its products/service.
• B) A successful integration strategy requires that the business be the lowest-cost provider in order to drive higher value creation than the competition.
• C) Economy of scale is more important to an integrator, while economy of scope is more important to a low-cost strategy.
• D) An integration strategy requires first that the business be stuck in the middle, while a low-cost strategy avoids this condition.

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Definitions:

Fixed Costs

Costs that remain constant in total regardless of changes in the level of production or sales volume.

Unit Selling Price

The amount of money charged for one unit of a product or service, often determining revenue and profitability.

Cost-Volume-Profit Graph

A graphical representation that depicts how changes in cost and volume affect a company's profit, used for break-even analysis and profit planning.

Profit Graph

A visual representation of how a company’s profits change at different levels of sales volume or production output.