A. Continuous improvement and continuous learning are important ways to improve the four factors that create competitive advantage. Prior strategic commitments are commitments to specific ways of doing business that can limit a company's flexibility and ability to respond to changing circumstances. Absorptive capacity refers to the company's ability to make use of new knowledge. None of these are factors that create competitive advantage, however.

B. A company's profitability is derived from the value customers place on its products, the price that it charges for its products, and the costs of creating those products. However, these are not the four factors that create competitive advantage.

C. Employee productivity and capital productivity are important components of efficiency. Product innovation and process innovation are the two types of innovation. However, these are not the four factors that create competitive advantage.

D. These are the four factors that create competitive advantage. Efficiency is the relationship between inputs and outputs, and superior efficiency leads to lower costs which leads to higher profitability and competitive advantage.

A product has superior quality when its customers consider that its attributes give them higher utility than do the attributes of competing products.

Innovation in products and processes is perhaps the most important component of competitive advantage, because competition is driven by innovation.

Superior responsiveness to customers means the company does a better job than its competition of identifying customer needs and satisfying them.