Identify and briefly describe the five most frequently used strategic approaches to achieving a sustainable competitive advantage. Provide examples.
What will be an ideal response?
The five most frequently used strategic approaches are:
• A low-cost provider strategy: It aims at achieving a cost-based advantage over rivals. Walmart and Southwest Airlines have earned strong market positions because of the low-cost advantages they have achieved over their rivals. Such strategies produce a durable competitive edge.
• A broad differentiation strategy: It aims to differentiate the company's product or service from that of rivals in ways that will appeal to a broad spectrum of buyers. Successful adopters of differentiation strategies include Apple (innovative products) and Johnson & Johnson in baby products.
• A focused differentiation strategy: It concentrates on a narrow buyer segment and outcompetes rivals by offering buyers customized attributes that meet their specialized needs and tastes better than rivals' products. Lululemon, for example, specializes in high-quality yoga clothing and the like, attracting a devoted set of buyers in the process.
• A focused low-cost strategy: It concentrates on a narrow buyer segment (or market niche) and outcompetes rivals by having lower costs and thus being able to serve niche members at a lower price. Private-label manufacturers of food, health and beauty products, and nutritional supplements use their low-cost advantage to offer supermarket buyers lower prices than those demanded by producers of branded products.
• A best-cost provider strategy: It gives customers more value for the money by satisfying their expectations on key quality features, performance, and/or service attributes while beating their price expectations. This approach is a hybrid strategy that blends elements of low-cost provider and differentiation strategies, and Target is cited in Chapter 1 as one example of a company pursuing a best-cost strategy.
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Ruby and Anita are partners. Ruby has a capital balance of $270,000 and Anita has a capital balance of $180,000. Denis contributes a building with a current market value of $170,000 to acquire an interest in the new partnership. Which of the following is TRUE of the journal entry to record this transaction? (Assume no bonus to any partner.)
A) Building will be debited for $170,000, Ruby, Capital and Anita, Capital will be credited for $85,000 each. B) Building will be debited for $170,000 and Denis, Capital will be credited for $170,000. C) Ruby, Capital and Anita, Capital will be debited for $85,000 each and Denis, Capital will be credited for $170,000. D) Ruby, Capital and Anita, Capital will be credited for $85,000 each and Denis, Capital will be debited for $170,000.
A bank would have discovered a critical incident if an examination of customer complaints revealed its customers were upset because they had to stand in line too long
Indicate whether the statement is true or false
A local vendor at the county fair sells snow cones for $.50 each. When 250 snow cones are sold, each snow cone is estimated to have $.10 in variable costs and $.15 in fixed costs. A local school group plans on attending the fair next week and wishes to purchase 50 snowcones for $.25 each. The vendor can sell as many as 400 snowcones per day. What is the minimum price the vendor should charge for
the snowcones? A) $ .50 B) $ .25 C) $ .10 D) $ .75
Nelson Company experienced the following transactions during Year 1, its first year in operation. 1. Acquired $9000 cash by issuing common stock. 2. Provided $5300 of services on account. 3. Paid $2350 cash for operating expenses. 4. Collected $3400 of cash from customers in partial settlement of its accounts receivable. 5. Paid a $250 cash dividend to stockholders. What is the amount of net income that will be reported on the Year 1 income statement?
A. $2950. B. $2150. C. $2700. D. $1900.