The risks of a cost leadership strategy include all of the following EXCEPT:
A) manufacturing equipment can become obsolete due to innovation.
B) firms may fail to understand customers' perceptions of competitive levels of differentiation.
C) competitors may learn how to successfully imitate their strategy.
D) firms may fail to include enough unique features in the product.

Question

Quizplus · Accepted Answer

The risks of a cost leadership strategy include manufacturing equipment becoming obsolete, competitors learning to imitate the strategy, and firms failing to understand customers' perceptions of competitive differentiation. These risks are all related to the ability of competitors to mimic the cost leadership strategy and erode its competitive advantage. However, failing to include enough unique features in the product would not necessarily be a risk of a cost leadership strategy, as the focus is on providing a basic product or service at a lower cost than competitors.

The Risks of a Cost Leadership Strategy Include All of the Following