Question

A strategy to gain competitive advantage through lower costs of operations and lower prices for products" is the definition of which strategy?

A. focus
B. differentiation
C. cost leadership
D. organizational
E. none of the choice

Answer 1

The strategy defined by gaining competitive advantage through lower cost of operations and prices for products is called cost leadership. Companies employing this strategy focus on becoming low-cost producers to offer the best prices in the market. This is different from the focus, differentiation, and organizational strategies.

Step-by-step explanation:

The strategy defined by gaining competitive advantage through lower costs of operations and lower prices for products is known as cost leadership. This strategy is one of the generic strategies identified by Michael Porter and involves a firm setting out to become the low-cost producer in its industry. The sources of cost advantage are varied and can include the pursuit of economies of scale, proprietary technology, preferential access to raw materials, and other factors.

A company that employs cost leadership will typically enjoy a well-established reputation for offering lower prices without necessarily compromising quality, which usually involves slashing prices in response to competitive threats and sustaining profits despite reduced margins. Cost leadership is distinct from differentiation and focus strategies, where companies seek competitive advantage through unique features or specific market niches, respectively.

Regarding the management strategies of John D. Rockefeller in building his empire, the one that is not representative of his strategies is social Darwinism. Horizontal integration, vertical integration, and the holding company model are well-documented strategies that Rockefeller used to consolidate his company's position in the oil industry.

Answer 2

A strategy to gain competitive advantage through lower operational costs and lower product prices is known as a cost leadership strategy. John D. Rockefeller used strategies such as horizontal integration, vertical integration, and the holding company model to build his empire, but not social Darwinism.

Step-by-step explanation:

A strategy to gain competitive advantage through lower costs of operations and lower prices for products is defined as a cost leadership strategy. This approach involves a firm aiming for the lowest production and distribution costs so that it can price lower than its competitors and still be profitable. Firms pursuing cost leadership may benefit from economies of scale, efficient operations, and a focus on cost reduction across their operations. Regarding John D. Rockefeller's management strategies, he did not use social Darwinism as a management strategy in building his empire. Instead, his strategies included horizontal integration, which involves a company increasing production of goods or services at the same part of the supply chain, vertical integration, which is the combination in one company of two or more stages of production normally operated by separate companies, and the holding company model, where a firm is created to buy and hold shares of other companies, which it then controls. These strategies allowed him to gain dominance over his competitors in the oil industry.