Final answer:
True, firms must often rethink their positioning strategy due to environmental changes or shifts in consumer preferences as a result of globalization and technological advancements, leading to increased competition and the need for continual product innovation.
Step-by-step explanation:
It is true that environmental changes or shifting consumer preferences often force a firm to rethink its positioning strategy. In the dynamic and globalized market, technological advancements and increasing competition have significantly impacted how businesses operate and compete. The introduction of business-to-business websites and the rise in online retail which allows for global transactions mean that local businesses face more competition and may need to shift their positioning strategies to stay relevant. Furthermore, changing consumer trends, such as a desire for sustainable products or unique design preferences, can also precipitate a need for firms to reconsider their product offerings and marketing tactics in a phenomenon known as demand shifts.
For instance, a company might have a successful product, but with the pressure to innovate and provide updated versions, the original product might be phased out. This could frustrate consumers who are unable to find the same product again, indicating a change in the firm's positioning to attract new customers or to reflect a new technological advancement. Additionally, new developments in production technology might lead to changes in the long-run average cost curve, altering the size distribution of firms in an industry. This could force some firms to change their positioning to either compete on scale or niche down to cater to a specific segment.