Which of the following statements is true of differentiation and cost structure?
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 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 interrelated. The cost of differentiation can affect a company's cost structure, and decisions about cost structure can affect a company's ability to differentiate its product or service. For example, a company that wants to differentiate itself through higher quality may need to invest in better production equipment, which can increase its cost structure. At the same time, a company that invests in a low-cost structure may have difficulty differentiating its product or service from cheaper competitors. Therefore, it is important for companies to consider both differentiation and cost structure when making strategic decisions.

Which of the Following Statements Is True of Differentiation and Cost