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Unformatted text preview: cutting its advertising expenditures. This resulted in a reduction in customers—and sales revenue. Explain how Wal-Mart's profitability gave it a strategic advantage over Kmart. Answer: If two competitors get into a “price war,” the company with the lower costs can reduce prices further (thus eroding its gross profit rate), but still operate at a profit. Thus, Wal-Mart's success at minimizing its operating costs has enabled it to drive many competitors out of business...
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This document was uploaded on 11/03/2011 for the course ACCOUNTING ac 201 at Montgomery.
- Spring '11