Multiple Choice
Which of the following best describes a focused low-cost strategy in the context of competitive markets?
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3. The Market Forces of Supply and Demand
Competitive Markets
Multiple Choice
In the context of competitive markets, a company achieves a sustainable competitive advantage when:
A
it receives government subsidies to support its operations
B
it temporarily lowers its prices below competitors to increase market share
C
it consistently outperforms its rivals by maintaining unique resources or capabilities that are difficult to imitate
D
it operates in a market with no barriers to entry or exit
Verified step by step guidance1
Understand the concept of sustainable competitive advantage: it refers to a firm's ability to maintain superior performance relative to its competitors over a long period.
Recognize that temporary actions, such as lowering prices below competitors, do not constitute sustainable advantage because they can be copied or reversed.
Identify that government subsidies are external supports and do not reflect the firm's own unique capabilities or resources.
Note that operating in a market with no barriers to entry or exit means competitors can easily enter or leave, making it harder to sustain an advantage.
Conclude that a sustainable competitive advantage arises when a firm consistently outperforms rivals by possessing unique resources or capabilities that are difficult for others to imitate.
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