Competitive advantage can be defined as:
A)The difference between a firm's return on assets and its return on sales
B)A firm's ability to earn a persistently higher profit margin than its rivals
C)A firm's ability to earn a profit rate which is persistently higher than its rivals
D)A firm's ability to outwit its competitors

Question

Quizplus · Accepted Answer

Competitive advantage refers to a firm's ability to earn a profit rate which is persistently higher than its rivals. The term "persistently" implies that the advantage is sustainable over a long period of time, rather than just a temporary gain. Option A is incorrect because it compares two different profitability measures, return on assets and return on sales. Option B is also incorrect because a higher profit margin does not necessarily mean competitive advantage, as the margin may be influenced by various factors such as pricing strategy or cost structure. Option D is incorrect because outwitting competitors is not necessarily a sustainable competitive advantage.

Competitive Advantage Can Be Defined As