Focusing Provides the Ability to Secure a Competitive Edge but Also

question 37

Multiple Choice

Focusing provides the ability to secure a competitive edge but also it carries some risks that will be detrimental to the focused firm,such as

• A) the chance that competitors will not find effective ways to match the focused company's capabilities in serving the market niche.
• B) the potential for the preferences and needs of niche members to shift over time toward mainstream provider product attributes.
• C) the potential for the niche to become so attractive it will not attract new competitors thereby providing excessive market segment profits.
• D) the likelihood that a focused company will become so cost efficient it will achieve excessive profits.
• E) None of these are risks worth worrying about.

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Definitions:

Sales Discounts

A reduction in the price of goods or services offered to customers, usually to prompt early payment or reward bulk purchases.

Gross Price Method

Gross Price Method involves recording inventory at its gross price, before deducting any trade discounts or rebates.

Allowance for Doubtful Accounts

An accounting concept referring to an estimate of the amount of receivables that may not be collected, which is used to reduce the total accounts receivable reported on the balance sheet.

Prior-Period Adjustments

Adjustments made to the financial statements to correct errors or omissions in previously issued financial statements from prior periods.