Which of the following statements best describes competitive advantage?
A) It refers to the pressure a supplier or buyer can exert on a company.
B) It is the advantage that occurs when a firm offers products to all customers at higher prices.
C) It derives from a firm's ability to create value for its customers that exceeds the cost of producing the product or service.
D) It is the capability to identify and react to changes in the external environment and to mobilize internal resources to deal with those changes.

Question

Quizplus · Accepted Answer

Competitive advantage refers to the unique advantage that a company has over other companies in the same industry. It is the ability of a firm to create more value for its customers than its competitors, while keeping its costs of production low. Such an advantage can help a company to attract and retain customers, and ultimately earn more profits. Option C best describes this concept. Option A talks about bargaining power, while option B is incorrect as higher prices do not lead to competitive advantage. Option D talks about the ability to respond to changes in the external environment, which is not specific to competitive advantage.

Which of the Following Statements Best Describes Competitive Advantage