Final answer:
Value Chain Analysis is the most useful tool for a company to determine if its prices and costs are competitive, by analyzing internal activities that contribute to cost and value creation.
It helps compare the firm's cost structure and pricing strategy with that of competitors. Insights from the market structure also influence a firm's pricing power and competitiveness.
Step-by-step explanation:
The analytical tool particularly useful for determining whether a company's prices and costs are competitive is C. Value Chain Analysis.
Value Chain Analysis examines the company's internal cost structure and identifies the activities that add value to its products and services, which directly impacts cost management and pricing strategy.
It involves a detailed assessment of both primary and support activities within the organization to analyze sources of competitive advantage and cost.
Comparing costs across the value chain with competitors helps the company understand whether their prices are competitive. Furthermore, using tools like Cost Benefit Analysis can complement this approach by comparing marginal costs and benefits.
The market structure also significantly influences a company's pricing power and its cost competitiveness.
The market structure is defined by factors such as the degree of market power, product similarities, barriers to entry, and the basis of competition which could be price, advertising, or other product differences. Understanding the market structure helps to assess competitive pressures and the firm's position within the industry.