Question

One of Waterfall Apparel's core values is to provide unbeatable customer service, a commitment introduced to the company by its founder more than 10 years ago. This value is expressed in the company's "True to You" campaign, which promises a no-questions-asked returns policy and an offer to stitch the customer's initials onto any item for free using a patented sewing technique, two features that are not offered by any of Waterfall's competitors. Although the campaign has resulted in a 10 percent decline in profits, Waterfall has decided to continue to pursue its founder's vision to reward customers and maintain employees' sense of purpose. Why does Waterfall's culture, exemplified by the "True to You" campaign, fail to support a competitive advantage?

Answer 1

Answer:

It does not increase economic value creation for the firm.

Explanation:

In this context, a competitive advantage refers to a strategy that could be implemented by business to outperform their competitors through their product.

To support competitive advantage, the business can either:

- Lower the price of the products by maintaining the current profit margin.

or

- increasing the price of the product, but offering additional services and features to justify the increase

But as we see from the excerpt above, campaign has resulted in a 10 percent decline in profits. So even though the company manage to maintain employees' sense of purpose through good services, they do not necessarily outperform their competitors.