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

question 24

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 potential for the preferences and needs of niche members to shift over time toward many of the same product attributes and capabilities desired by buyers in the mainstream portion of the market.
• 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.

Recognize the impact of sample size, confidence level, and population standard deviation on the width of a confidence interval.

Appreciate the importance and application of confidence intervals in real-world situations and decision-making.

Distinguish between different conditions that may or may not allow the use of certain formulas to estimate the population mean.

Explain the significance of the standard error and its role in the calculation of confidence intervals.

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Definitions:

Probabilities

The measure of the likelihood that an event will occur, often expressed as a number between 0 and 1.

Cost Of Capital

The rate of return that a company must earn on its investments to maintain its market value and attract funds.

NPV

Net Present Value, a method used in capital budgeting to evaluate the profitability of an investment or project.

Beta

A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole, where a beta greater than one indicates higher than market volatility and less than one indicates lower.