Which of the Following Is True Regarding Differentiation Strategy

question 70

Multiple Choice

Which of the following is true regarding 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 this strategy have to build large-scale facilities.
• D)Companies have to control their overhead costs to use this strategy.
• E)If a company succeeds in this strategy, it achieves above-average returns.

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Definitions:

Held-to-maturity Investments

Securities that a company has the intent and ability to hold until a fixed maturity date, typically reported at amortized cost on the balance sheet.

Fair Value

The estimated market value of an asset or liability, based on current prices in an open and competitive marketplace.

Equity Method

A method of accounting for investments in which the investment is initially recorded at cost and subsequently adjusted for the investor’s share of the investee’s net income or losses and dividends received.

Significant Influence

It refers to the power to participate in the financial and operating policy decisions of an investee but not control those policies.