Which of the following statements is incorrect about fundamental business strategies?
A)A company implementing a cost differentiation strategy is attempting to increase operating efficiency of assets and improve the total asset turnover ratio.
B)A company implementing a product differentiation strategy is attempting to improve its net profit margin through charging higher prices.
C)A company will be more profitable because it will attract a higher volume of customers and sales revenue when it follows a product differentiation strategy versus a cost differentiation strategy.
D)Financial leverage is how a company finances its assets and can affect total profitability return to stockholders.

Question

Quizplus · Accepted Answer

This statement is incorrect because following a product differentiation strategy does not necessarily guarantee a higher volume of customers and sales revenue. It depends on the effectiveness of the differentiation and the overall market demand for the product. Both cost differentiation and product differentiation strategies can lead to increased profitability depending on how well they are executed. The other statements are all accurate.

Which of the Following Statements Is Incorrect About Fundamental Business