Firms that lack competitive advantages will:
A)Have difficulty finding positive NPV projects for investment
B)Be forced to capture larger market shares to be profitable
C)Avoid the need to conduct sensitivity analyses
D)Be forced to operate with a high degree of operating leverage

Question

Quizplus · Accepted Answer

Competitive advantages are essential for firms to remain profitable in the long run. Without these advantages, they will find it difficult to generate positive NPV projects, which means that their investments will not yield the returns needed to justify them. This puts such firms at risk of insolvency or closure. Therefore, option A is the correct choice.

Firms That Lack Competitive Advantages Will