A Broad Differentiation Strategy Improves Profitability When

question 46

Multiple Choice

A broad differentiation strategy improves profitability when

• A)it is focused on product innovation.
• B)differentiating enhances product performance and quality.
• C)the differentiating features appeal to sophisticated and prestigious buyers.
• D)the higher price the product commands exceeds the added costs of achieving the differentiation.
• E)the differentiator charges a price that is only fractionally higher than the industry's low-cost provider.

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Definitions:

Managerial Bureaucracy

A type of organizational structure that is characterized by a formal division of responsibilities, a clear hierarchy, and a detailed set of rules and procedures.

Long-run Average Cost

The per-unit production cost when all factors of production, including capital, are variable, and the scale of production can be changed.

Output Units

Quantitative measures representing the amount of goods or services produced by a company or an economic system.

Constant Returns to Scale

A situation where increasing all inputs by the same proportion results in output increasing by that same proportion, indicating linear scalability of production processes.