Question

How valuable a low-cost leader's cost advantage is depends on A) the aggressiveness with which the low-cost leader pursues converting the cost advantage into the absolute lowest possible costs. B) whether it is easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match its low costs. C) the low-cost leader's ability to be the industry leader in manufacturing innovation so as to keep lowering its manufacturing costs. D) how easy it is for the low-cost leader to gain the biggest market share. E) the leader's ability to combine the cost advantage with a reputation for good quality.

Answer 1

Answer:

The correct answer is  B) whether it is easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match its low costs.

Explanation:

A cost advantage is where a business is able to produce its output at a lower cost compared to its competitors. It can result due to different factors such as superior technology, more effective processes, and lower resource costs.

The value of a leader's cost advantage depends on how easily the rival businesses can copy its methods to reduce their own costs. If the rival businesses can easily copy these methods, then their own costs shall also reduce and the leader's cost advantage shall cease to exist.

If, however, the methods cannot easily be adopted by other businesses, then the leader's cost advantage remains effective and highly valuable. This corresponds to option B.