Which of the following statements about differentiation and cost structure is true?
A) Differentiation and cost structure decisions affect one another.
B) Differentiation and cost structure decisions do not affect one another.
C) Companies that focus on the higher-value end of the market tend to have a lower cost structure.
D) Differentiation decisions do not affect a company's profitability.
E) Cost structure decisions do not affect a company's profitability.

Question

Quizplus · Accepted Answer

Differentiation and cost structure decisions are interdependent, as a company's differentiation strategy will impact its cost structure. For example, investing in research and development to create a unique, high-quality product may increase costs but also allow a company to charge a premium price and differentiate itself from competitors. Conversely, a company that focuses on low cost may have a simpler product offering with fewer features and benefits, which can limit differentiation. Ultimately, a company's cost structure will impact its profitability, so both differentiation and cost structure decisions are crucial in achieving long-term success.

Which of the Following Statements About Differentiation and Cost Structure