Multiple Choice
A low-cost provider strategy becomes increasingly appealing and competitively powerful when:
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3. The Market Forces of Supply and Demand
Competitive Markets
Multiple Choice
In the context of competitive markets, by creating its own direct sales force, a company can:
A
eliminate all forms of competition in the market
B
gain more control over its distribution channels and customer relationships
C
reduce its production costs to zero
D
guarantee higher prices for its products regardless of market demand
Verified step by step guidance1
Understand the nature of competitive markets: In perfectly competitive markets, many firms sell identical products, and no single firm can control the market price or eliminate competition.
Analyze the effect of creating a direct sales force: When a company creates its own direct sales force, it gains more control over how its products are distributed and how it interacts with customers, improving customer relationships and potentially enhancing brand loyalty.
Evaluate the options given: Eliminating all competition is not feasible in competitive markets because many firms exist; reducing production costs to zero is unrealistic; guaranteeing higher prices regardless of demand contradicts the market forces of supply and demand.
Recognize that gaining control over distribution channels and customer relationships allows the company to differentiate itself and potentially improve its market position without violating competitive market principles.
Conclude that the correct understanding is that creating a direct sales force helps the company gain more control over its distribution channels and customer relationships, rather than eliminating competition or controlling prices.
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