if the potential responses of competing firms are likely to be very detrimental to the costs advantages of cost leaders, firms pursuing a cost-leadership competitive strategy should

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07-10-2022
Business

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if the potential responses of competing firms are likely to be very detrimental to the costs advantages of cost leaders, firms pursuing a cost-leadership competitive strategy should

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tutorconsortium350 tutorconsortium350 · Answer 1 · 2022-10-11T02:01:51-04:00

In order to maximize their profit margins while sacrificing some market share, companies using a cost-leadership strategic plan should maintain their prices at parity with those of their rivals.

The correct option is D.

What are the competitors' prices?

A pricing strategy called "competition-based pricing" entails comparing your prices to those of your rivals. This is contrasted with other pricing methods like value-based pricing as well as cost-plus pricing, in which costs are established by looking at other aspects like consumer demand or manufacturing costs.

What does competitive pricing look like in practice?

A method known as competitive pricing involves setting a product's price in line with those of competitors. An example from the actual world is the price of popular products. The retail giant collects price information from competitors to offer the greatest bargain on the market.

What does a higher margin of profit mean?

The net profit margin, often known as the net margin, represents the ratio of a company's net income to its total sales. A corporation is more effective at converting sales towards actual profit if its net profit margin is higher.

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I understand that the question you are looking for is:

If the potential responses of competing firms are likely to be very detrimental to the costs advantages of cost leaders, firms pursuing a cost-leadership competitive strategy should

A) drop their prices below competitors' prices to increase overall economic performance through increased volumes of profitable sales.

B) raise their prices above competitors, increasing overall economic performance through higher margins.

C) focus on a specific niche market to avoid direct competition with aggressive competitors.

D) set their prices equal to competitors' prices, sacrificing some market share for increased profit margins.