The Risks of a Focused Strategy Based on Either Low-Cost

question 57

Multiple Choice

The risks of a focused strategy based on either low-cost or differentiation include

• A) the chance that niche customers will bargain more aggressively for good deals than customers in the overall marketplace.
• B) the chance that competitors will find effective ways to match the focused firm's capabilities in serving the target niche.
• C) the potential for the segment to be highly vulnerable to economic cycles.
• D) the potential for segment growth to race beyond the production or service capabilities of incumbent firms.
• E) All of these choices are correct.

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Definitions:

Debit Balance

A situation in an account where the sum of debits exceeds the sum of credits, indicating an amount owed or an asset.

Allowance for Doubtful Accounts

An estimation of the accounts receivable that is not expected to be collected, reducing the gross receivables to the amount that is expected to be collected.

Bad Debt Expense

An expense reported in the financial statements, representing accounts receivable that a company does not expect to collect from its customers.

Allowance Method

A method in accounting that estimates uncollectible accounts to account for potential bad debts at the conclusion of each period.