Really, your desired point on the price/performance tradeoff depends on the specific circumstances of your business. (a) Being able to compete on price means you have to be really hard-nosed about optimizing every part of your operations to stay lean. Good relationships with suppliers and competent execution of your strategy are paramount -- think Walmart. (b) Competing on product means you have to be able to blow aw…
Speaking of business schools, this analysis sounds almost exactly like the Porter Competitive Strategy theory taught at such places.