Multiple Choice
In a competitive market, if a company uses Porter's cost leadership strategy, what is the primary objective of this approach?
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3. The Market Forces of Supply and Demand
Competitive Markets
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following factors do business organizations use to stay competitive in a competitive market?
A
Reducing production costs through efficiency improvements
B
Ignoring consumer preferences and market trends
C
Avoiding innovation and technological advancements
D
Restricting output to increase prices
Verified step by step guidance1
Understand the nature of a competitive market: In such markets, many firms sell similar products, and no single firm can influence the market price significantly.
Recognize that to stay competitive, businesses must focus on strategies that improve their position without violating market competition principles.
Evaluate each option by considering its impact on competitiveness: For example, reducing production costs through efficiency improvements allows a firm to offer competitive prices or increase profit margins.
Identify that ignoring consumer preferences and market trends is detrimental because it disconnects the firm from customer needs, reducing competitiveness.
Conclude that avoiding innovation and restricting output are generally not strategies used to stay competitive in a competitive market, as innovation drives growth and restricting output is more typical in monopolistic or collusive settings.
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