Final answer:
A new business might choose a single-segment strategy to utilize its resources efficiently by focusing on a core competency, resulting in better service, competitive pricing, and potential economies of scale.
Step-by-step explanation:
A new business might pursue a single-segment strategy to focus its resources and capabilities on mastering a particular market niche. By specializing in one segment, the company can develop a deep understanding of its customers' needs, tailor its products or services to serve them better, and achieve a competitive advantage. This focus on a core competency often enables a company to operate more efficiently and achieve lower costs through economies of scale. Furthermore, concentrating on a single segment can help a new business avoid spreading itself too thin across multiple markets, where it may not have the expertise or resources to compete effectively.
Additionally, being positioned at or close to the bottom of the long-run average cost curve indicates that a business is operating efficiently, likely due to a focused strategy. Specialization can often lead to an optimized production process, where the firm becomes highly skilled at creating its product, reducing waste, and ultimately lowering costs, resulting in competitive pricing.