Question

1. All successful firms compete and outperform their rivals by developing bases for competitive advantage, which can be achieved only through cost leadership.

• True

• False

2. Decisions by boards of directors are always consistent with shareholder interests.

• True

• False

3. The fast-fashion business model of companies such as Inditex SA, the owner of Zara and several other brands, is fundamentally sustainable.

• True

• False

Answer 1

1.Cost leadership is one of the marketing strategy and not the only strategy to gain competitive edge over the rivals. So, this statement is FALSE

2.Decision by board of directors are not always consistent with the shareholders' interest. Shareholders are only concerned with maximization of their profit which may or maynot align with the goals of the directors. Such disagreement can lead to agency problems. So. this statement is FALSE

3.Zara's business model follows two fundamental strategies - stocking less merchandise and updation of collection as often as possible. These to approach are helping Zara to fundamentally sustain the business. TRUE