Business Studies Multiple Choice Question – 2 October 2021

Woolies is an international supermarket chain offering high-quality products at prices 40% lower than rival supermarkets.

The most likely reason for Woolies to use this strategy is to …?

Select ONE answer:

1. sample the market
2. gain a competitive advantage
3. test the market
4. reduce production costs

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct – Woolies is selling all its products to all of the market. 
2. Correct – competitive advantage is a unique aspect of the business that competitors cannot easily imitate which can be based on innovation, reputation, quality, cost and price. Woolies differentiates itself from its retail rivals by charging lower prices, therefore gaining a competitive advantage, because lower prices are likely to attract more customers thereby increasing revenues and or profit.
3. Not correct – the products have already been tested in the market before being offered for sale in Woolies.
4. Not correct – the Woolies’s strategy is to do with sales revenue and not costs which are dependent on the price of factor inputs such as wages, electricity and rent. 

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