Question

Gilroy Crackers enjoys a competitive advantage as a cost leader because high demand for its products has allowed it to operate at the minimum efficient scale. Which of the following scenarios would be most concerning to the managers of Gilroy Crackers?

A) Gilroy's leading competitor develops a new low-sodium product.
B) Gilroy's most reliable production worker takes a job in another industry.
C) A major winter storm shuts down Gilroy's production for several days.
D) A wheat shortage raises input costs across the industry.

Answer 1

The answer is C. A major winter storm shuts down Gilroy's production for several days

Step-by-step explanation:

Being a cost leadership means one has a competitive advantage by producing at the lowest cost in the industry. Cost leadership is characterised by company efficiency, size etc.

Gilroy Crackers would be most concerned about a major winter storm shuts down Gilroy's production for several days because Gilroy won't be able to utilize its capacity and the raw materials already bought might turn to a waste through to lack of usage.

Also, some of its needed machineries might have also been rendered useless by the storm.