Question

Answer the following questions:

1. How would you define a low cost strategy in the digital camera industry?
2. How would you define a best cost strategy in the digital camera industry?
3. How would you define a differentiated strategy in the digital camera industry?
4. Explain how currency forward contracts and currency futures contracts work. How might an MNC use these instruments? How might a speculator use a put or call option?

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1.

A low cost pricing strategy in the digital camera industry would be creating cheap, low option cameras in order to gain market share by low pricing. These cameras would probably be produced by labor that isn't considered a significant input (doesn't need substantial training or education to do their jobs.) The features of the cameras would also be limited. There probably would be only 1-2 models and it would lack premium features and even some features many would consider standard. Realistically it would only have the accepted industry minimum for mega pixels and not much more. Production of these simple cameras would be large and be at the top 25% of the industry. For this price point warranties would be negligible or extremely basic. If companies did implement a warranty it would be probably only cover the first 6 months of use. Lastly, a low cost pricing strategy would probably not have any serious marketing strategy due low pricing and lack of features, the item speaks for itself....

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