The Chief Difference Between a Low-Cost Provider Strategy and a Focused

question 30

Multiple Choice

The chief difference between a low-cost provider strategy and a focused low-cost strategy is:

• A) whether the product is strongly differentiated or weakly differentiated from rivals.
• B) the degree of bargaining power that buyers have.
• C) the size of the buyer group that a company is trying to appeal to.
• D) the type of value chain being used to achieve a low-cost competitive advantage.
• E) the number of upscale attributes incorporated into the product offering.

---

Definitions:

Internal Growth Rate

The maximum rate at which a firm can expand its operations without obtaining additional financing, driven by reinvestment of its earnings.

Plowback Ratio

A financial metric that measures the proportion of earnings retained by a company after dividends have been paid out to shareholders.

Dividend Payout

The fraction of a firm's earnings allocated to its shareholders through dividends.

Financial Planning

The process of estimating the capital required and determining its competition; it is the process of framing financial policies in relation to procurement, investment, and administration of funds of an enterprise.