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Reading 59: Introduction to Industry and Company Analysis-LOS

Session 14: Equity Analysis and Valuation
Reading 59: Introduction to Industry and Company Analysis

LOS k: Describe the elements that should be covered in a thorough company analysis.

 

 

An aggressive price reduction to gain market share is most likely to be associated with a:

A)
product differentiation strategy.
B)
cost leadership strategy.
C)
service differentiation strategy.


 

Michael Porter identified two competitive strategies: cost leadership and product or service differentiation. A firm that uses a cost leadership or low-cost strategy seeks to have low production costs that will enable it to offer lower prices than its competitors to protect or gain market share. A product or service differentiation strategy seeks to gain a price premium for its products by making them distinctive to the consumer.

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