Often a firm is confronted with the key question of whether the quality of its products and services should be improved. For many readers, the question may even seem illogical: How could it not be beneficial for a firm to improve the quality of its products and services?

On closer analysis, however, the question has deep strategic implications because ultimately, a firm’s market structure and competition influence its choice of quality. Incurring additional costs to provide a level of quality that is neither valued by consumers nor provides sufficient differentiation from the competition may be unwise in the long run.

The purpose of strategy is to create a deliberate plan of action that creates a competitive advantage for a firm. The firm that achieves the highest rates of profitability in its industry is the one that has attained a competitive advantage over rivals.

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