(Answered) : What could be the Generic Strategy of these companies? Give reasons: Company A Company B ROE 2% 8% Profit Margin

What could be the Generic Strategy of these companies? Give reasons:

Company A

Company B

ROE

2%

8%

Profit Margin %

7%

4%

TAT

1.7

3.0

ROA

11%

8.7%

Generic Strategy

Expert Answer

As the profit margin of company A is higher than that of company B thus company A is profitable than company B. From the table, we can state that Return on Asset of company A is also greater than of company B. Return on Asset is determined as net income divided by total assets. As the ROA of A is more than B, this is very much consistent with the profit margin which indicates the greater profitability of A than B.

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