Question

Potomac Industries is a manufacturer of high-definition televisions. The industry has gone through a period of rapid growth and expansion, and has started to experience a decline in the rate of growth. Several smaller firms have been bought out by larger competitors, and competition for market share is intensifying. Which of the following strategies is most likely to give Potomac a competitive advantage?
A. Imitate the features of the highest-selling television on the market.
B. Implement process innovations that lower per-unit costs.
C. Increase spending on marketing and attempt to acquire a high-profile celebrity spokesperson.
D. Introduce product innovations that differentiate Potomac televisions from the competition.

Answer 1

Answer:

Option B. Implement process innovations that lower per unit costs

Explanation:

The reason is that the controlling cost will give cost advantage over the competitors and will let the company to compete at a better platform making greater number of sales and driving maximum sales which will also give economies of scale. Economies of scale is the benefits of additional costs savings that comes with the additional manufacturing of the product which means that greater the manufacturing the greater would be the savings of costs. So economies of scales give competitive advantage over the rivals so the correct option is B.

Answer 2

Answer:

D) Introduce product innovations that differentiate Potomac televisions from the competition.

Explanation:

In this case, high-definition TVs are currently at their maturity stage, and this means that sales have already peaked, competition is high and firms must "fight" to retain there market share. One common strategy for retaining and sometimes marginally increasing market share is by launching "spin-offs" or different variations of their existing products. E.g. Coke continuously offers new variations based on the original drink like Diet Coke, Coke Zero, etc.

This differentiated newer versions of old products can keep consumer interest high, lower churn and prolong the maturity stage as long as possible before the product's decline.