When a company is profitable, there is always the threat of new competitors. The

Question

When a company is profitable, there is always the threat of new competitors. The market structure may deter new entrants. For example, if there is a significant investment required to enter the market, competition may be minimal. However, if the investment to start a business is minimal, the threat of new entry is substantial. Managers can use different techniques to differentiate their companies from competitors. In the following discussion, consider the strategic techniques a manager might use to accomplish this differentiation. Which strategy is better, in your opinion: high-quality or low price? Explain your reasoning.

Explanation / Answer

A low price strategy is unlikley to be successful as business houses swiftly match a price cut or a lower price product and if there is enough competition, this strategy is highly unsuccessful. Hence a quality product is more likely to sustain profits for the firm in the long-run.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.