A Competitive Strategy Predicated on Low-Cost Leadership Tends to Work

question 31

Multiple Choice

A competitive strategy predicated on low-cost leadership tends to work best when

• A) there are widely varying needs and preferences among the various buyers of the product or service.
• B) there are many market segments and market niches, such that it is feasible for a low-cost leader to dominate the niche where buyers want a budget-priced product.
• C) price competition is especially vigorous and the offerings of rival firms are essentially identical, standardized, commodity-like products.
• D) buyers prefer that the products/services of competing sellers have widely varying attributes and prices.
• E) buyers have high switching costs and there is considerable diversity in how buyers use the product.

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Definitions:

Reversing Entries

Entries recorded at the start of a new accounting cycle to negate or reverse adjustments that were documented at the conclusion of the preceding period.

Payment

The act of transferring money or value from one party to another as a form of settlement for goods, services, or obligations.

Unearned Fees

Revenue received by a company for services yet to be performed, recognized as a liability until the services are provided.

Fees Earned

Income received for services provided by a company or individual.