A major advantage afforded by a low-cost provider strategy is
A)overly aggressive price-cutting.
B)setting the industry's price ceiling to capture volume gains and achieve economies of scale.
C)relying on an approach to reduce costs that can be easily copied.
D)becoming too fixated on cost reduction.
E)having the basis for the firm's cost advantage undermined by cost-saving technological breakthroughs that can be readily adopted by rival firms.

Question

Quizplus · Accepted Answer

Setting the industry's price ceiling to capture volume gains and achieve economies of scale is a major advantage of a low-cost provider strategy. By offering lower prices and capturing more customers, the firm can achieve economies of scale and lower costs even further. This can lead to a sustainable cost advantage over rivals who cannot match the low prices and high volumes of the low-cost provider.

A Major Advantage Afforded by a Low-Cost Provider Strategy Is