Question

In order to maintain the organization's differentiation and competitive position in the market, managers can deliberately try to erect barriers to entry and to exploit the experience curve to establish the organization as the low-cost leader. However, through timidity, some managers quietly take a different approach, they don't maximize profits. While establishing a pricing structure that produces only modest profits might dissuade competitors from being drawn to the market, it is a cowardly and inappropriate tactic that shareholders rightly react to quite angrily when it is discovered. Select one: True False

Answer 1

True- as strategic trade off occurs when a firm is confronted by the tension between the higher costs of value creation and the pressure to keep costs in check.