Generally, entrepreneurs should avoid head-to-head price competition with other firms that can more easily achieve lower prices through ________.
A)offering lower value products and services
B)a better designed Web site
C)geographic advantages
D)lower cost structures

Question

Quizplus · Accepted Answer

Head-to-head price competition can be difficult to sustain in the long run as it can lead to a race to the bottom, where profit margins are eroded. Therefore, it is often better to focus on creating a unique value proposition that differentiates the business from competitors. However, if a competitor can achieve lower prices through a lower cost structure (e.g. due to economies of scale, geographic advantage, etc.), it may be difficult for an entrepreneur to match those prices without sacrificing margins.

Generally, Entrepreneurs Should Avoid Head-To-Head Price Competition with Other Firms