Briefly explain why firms that pursue cost leadership or differentiation achieve returns that are about equivalent, have higher returns, and firms that are stuck in the middle have the lowest returns?

Once cost leadership is attained this results to a comparative advantage to a firm since the firm will produce goods and services at a relatively low-cost compared to other firms in the industry. Thus pricing their product at a lower cost than other firms whose cost of production is high. Hence the firm gets a higher return.

On product differentiation, once products are differentiated, they attract customers resulting in increased sales improving their revenue.

On the other hand, firms that are stuck in the middle and lack cost leadership, and lack product differentiation suffer from low returns since no changes are made on their cost of production.