Question

Which of the following is NOT one of the risks of a cost leadership strategy?

A) The technology that the organization has been using changes.

B) Achieving excessive success causes jealousy amongst competitors.

C) Competitors can achieve viable imitations.

D) Other bases for cost leadership erode.

E) Proximity in differentiation is lost.

Answer 1

Jealousy amongst competitors is not a direct risk of a cost leadership strategy but could motivate rivals to enhance their strategies, which could impact the firm using cost leadership. Option B is the correct answer.

Step-by-step explanation:

Among the options given, the one that is NOT a risk of a cost leadership strategy is B) Achieving excessive success causes jealousy amongst competitors. Cost leadership strategies can indeed lead to competitive pressures, such as technological changes, imitations by competitors, erosion of cost bases, and the danger of reduced differentiation.

However, the risk associated with competitors becoming jealous does not directly influence the viability or success of a cost leadership strategy. Instead, what may happen is that these jealous competitors could be motivated to improve their own strategies or value propositions, which could present a more tangible competitive risk to the firm pursuing cost leadership.