Which of the Following Is False Regarding How a Differentiation

question 33

Multiple Choice

Which of the following is false regarding how a differentiation strategy can help a firm to improve its competitive position relative to the Porter five-forces model?

• A) Firms will enjoy high customer loyalty.
• B) By increasing firm margins, it avoids the need for a low-cost position.
• C) It reduces buyer power because buyers lack comparable alternatives.
• D) Supplier power is increased, because suppliers will be able to charge higher prices for their inputs.

---

Definitions:

Net Sales

Sales revenue less sales returns and allowances and less sales discounts.

High-Low Method

A technique used in management accounting and cost accounting to split fixed and variable costs based on the highest and lowest levels of activity.

Mixed Cost

Expenses that have both a fixed and variable component, changing with the level of activity.

Variable Cost

Costs that vary directly with the level of production or with the volume of output.