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If a Firm Prices Low Worldwide in an Attempt to Build

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If a firm prices low worldwide in an attempt to build global sales volume as rapidly as possible,even if this means taking large losses initially,what kind of strategy is it pursuing?


Definitions:

Contribution Margin

The amount of revenue from sales that exceeds variable costs, contributing to covering fixed costs and generating profit.

Operating Income

The profit realized from a business's operations, calculated by subtracting operating expenses from gross profit.

Absorption Costing

An approach to pricing that incorporates all production-related costs such as direct materials, direct labor, along with variable and fixed overhead expenses, into the product’s cost.

Variable Costing

An accounting method that includes only variable production costs (costs that vary with output) in product costs, while fixed costs are charged to the period they occur.

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