Why Is It Important for Firms in the Same Industry

question 79

Essay

Why is it important for firms in the same industry to choose distinct but different strategic positions?

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Definitions:

Moral Hazard

A situation where one party engages in risky behavior or lacks incentive to guard against risk because another party bears the consequences of that behavior.

Risk Efficiently

The optimal management of risk to maximize returns relative to the level of risk taken.

Flood Insurance

A type of insurance policy that covers property loss and damage due to flooding, often required in high-risk flood areas.

Flood Plains

Flat areas adjacent to rivers and streams that are subject to periodic flooding, often characterized by fertile soil.