Which of the following best explains how Apple has been able to sustain its competitive advantage in the smartphone industry?

• A. By avoiding brand differentiation and marketing efforts
• B. By investing heavily in research and development to create innovative products and features
• C. By focusing exclusively on mass production of generic smartphones
• D. By relying solely on low-cost labor to reduce production expenses

Answer: (B)

Verified step by step guidance

1. Understand the concept of competitive advantage in microeconomics, which refers to a firm's ability to maintain superior performance relative to its competitors, often through unique resources, capabilities, or strategies.
2. Analyze each option by considering how it relates to creating or sustaining a competitive advantage. For example, brand differentiation and innovation often lead to higher consumer preference and market power.
3. Recognize that avoiding brand differentiation and marketing efforts typically weakens competitive advantage because it reduces consumer loyalty and product uniqueness.
4. Consider that focusing exclusively on mass production of generic products usually leads to price competition rather than sustainable advantage, as competitors can easily imitate generic products.
5. Identify that investing heavily in research and development to create innovative products and features aligns with sustaining competitive advantage by continuously offering unique value that competitors find hard to replicate.