Which factor is an example of a competitive capability?

Cost-effective production methods are indeed a prime example of a competitive capability because they directly contribute to a company's ability to operate efficiently and maintain lower costs than its competitors. This operational efficiency can translate into pricing advantages in the market, allowing the company to offer products at more attractive prices without sacrificing profit margins. In essence, being able to produce goods or services at a lower cost provides a distinct competitive edge, as it enhances the company's ability to respond to market demands, adjust pricing strategies, and potentially increase market share.

On the other hand, market share dominance, product diversification, and recognition by industry peers, while important aspects of a company's overall strategy, do not qualify as core competitive capabilities in the same way. Market share dominance reflects the outcome or result of competitive capabilities rather than a capability itself. Product diversification can be part of a company’s strategy but does not inherently denote efficiency or effectiveness in production processes. Recognition by industry peers may indicate a reputation or standing in the industry, but it does not directly affect a company’s competitive proficiency in delivering products or services efficiently.