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 allow firms to earn higher profits, which can then be used to finance new projects with positive NPV. Without such advantages, firms may struggle to find profitable investment opportunities.

Firms That Lack Competitive Advantages Will