Which of the Following Is True Regarding the Differentiation Strategy

question 32

Multiple Choice

Which of the following is true regarding the differentiation strategy?

• A)Differentiation strategy cannot protect a company from price sensitivity.
• B)Brand images play a negligible role in differentiation strategies.
• C)Companies using the differentiation strategy have to build large-scale facilities.
• D)Companies have to control their overhead costs to use the differentiation strategy.
• E)Companies achieve above-average returns if they succeed in their differentiation strategy.

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Definitions:

Return on Investment

A measure of the profitability of an investment expressed as a percentage of the initial amount invested.

Turnover

The rate at which inventory or assets are replaced over a given period, or alternatively, the total amount of a company's sales or revenues.

Net Operating Income

The total profit of a company after operating expenses are subtracted, but before taxes and interest are deducted.

Average Operating Assets

The average value of the assets involved or used in the operating activities of a company over a given period, typically calculated as the average of the opening and closing balances of these assets.